BMO Bank of Montreal

BMO Bank of Montreal
BMO Financial Group

BMO Financial Group

December 20, 2011 09:00 ET

Grandparents-Give Grandkids the Gift of an Education this Holiday Season

- BMO study finds that most grandparents give approximately $100 a year in gifts to each of their grandkids

- A holiday gift of $100 a year from each set of grandparents to an RESP can provide a child with up to $11,000 for their post-secondary education

- Current cost of a four-year degree can be up to $60,000; it could be as high as $140,000 for a child born in 2011

- BMO offers advice on how to maximize education savings

TORONTO, ONTARIO--(Marketwire - Dec. 20, 2011) - Whether they go by Grandma, Grand-père, Bubbie, Naniji, Nonno, Abuela or YehYeh, and they celebrate Christmas, Noel, Hanukkah, Eid, Kwanza, Navidad or Novena, grandparents have at least one thing in common - they love to spoil their grandchildren during the holidays.

According to a study from BMO Financial Group, grandparents give, on average, approximately $100 annually to each of their grandkids. Why not invest in their future this holiday season by giving the gift of an education through a contribution to your grandchild's Registered Education Savings Plan (RESP)?

An increasing number of Canadians are contributing to RESPs; according to Statistics Canada, RESP assets grew to $25.9 billion by the end of 2009.

Opening an RESP for a child is getting increasingly critical as the costs of post-secondary education rise. Currently, a four-year degree can cost as much as $60,000. Given current trends, some sources estimate that children born in 2011 can expect to pay as much as $140,000 for their degree when they enter college or university.

"Contributing even small amounts to an RESP can go a long way in saving for a post-secondary education," said Mark Stewart, Director, Product Development & Management, BMO Investments Inc.* "Many grandkids receive some cash gifts during the holidays; these amounts, if invested in an RESP, will grow over time through compounding interest and the funds provided by the federal government's Canada Education Savings Grant."

Grandparents- How much of a difference can a holiday gift of $100 make to your grandchildren's RESPs?

If each set of grandparents gives the gift of $100 per year to their grandchild's RESP, by the time the child turns 17 years old, he/she could have up to $11,000 saved for a post-secondary education. This takes into consideration the federal government's Canada Education Savings Grant.

Interested in starting or contributing to an RESP for your grandchild? Here is some advice to get you started:

  • Think about alternative gift-giving during the holidays - RESP contributions make great gifts for seasonal holidays. Anyone can contribute to a child's RESP and he/she can have multiple accounts.
  • Start early and make regular contributions - Even if your grandchild's education will not begin for many years to come, it is beneficial to start making regular contributions as early as you can.
  • Speak with a financial professional - RESPs can hold several different types of investments. Speak with a financial professional to determine the investment vehicles that best fit with your needs.
  • Forego the daily splurge - Small expenses, like a fancy coffee or expensive lunch, can really add up. Aim to put the money saved towards your regular contributions.

*BMO Investments Inc. is a financial services firm and a separate legal entity from the Bank of Montreal

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