Th . A Registered Education Savings Plan is a type of savings account that grows tax free until a child is ready for post-secondary education. RESPs are a good way to save for a number of reasons: - the money grows tax free until the child needs it for tuition, residence and other educational expenses; - an RESP allows you to apply for the Canada Education Savings Grant on your child's behalf; - you may contribute up to $4,000 a year in an RESP

An RESP can exist for 26 years before you must close it. If a child does not wish to pursue post-secondary education immediately, it is recommended that you wait a few years until the child decides whether or not to pursue his or her education. Rest assured that the money invested in the RESP will continue to earn tax-sheltered income during this period. Should your child decide never to pursue post-secondary education, you have the option of transferring the earned income (up to a maximum of $50,000) into your Registered Retirement Savings Plans (RRSPs), or that of your spouse. Finally, the money can be withdrawn subject to various tax rates. Under all these circumstances, the grant is returned to the Government of Canada. However, the interest earned on the grant remains with you, the subscriber.

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		A Registered Retirement Savings Plan or RRSP is a Canadian investment account that provides some tax benefits for saving for retirement in Canada. RRSP refers to a provision in the Income Tax Act that allows a person to shelter financial property from taxes. Examples of financial property that can be used with an RRSP are: mutual funds, shares in a company (stocks), bonds, mortgages, Labour Sponsored Investment Fund and GIC's.

A deduction limit is generally calculated as 18% of a person's earned income from the previous tax year, minus any "pension adjustment", up to a specified maximum. This specified maximum has been rising, for 2004 the maximum was $14,500, for 2005 it was $16,500, and in 2006 it was $18,000. After that, it is supposed to be subject to inflation. Any RRSP deductions not taken in a tax year are carried forward indefinitely to future tax years. So, for example, if a person's RRSP deduction limit is $8,000 and he deducts only $3,000, the unused $5,000 deduction is carried forward. Furthermore, it would be increased by the deduction limit as calculated by the formula above.

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		Mutual fund is a pool of money contributed by investors with similar investment objectives. Investors in the mutual fund share the income, expenses, gains and losses that the fund makes on its investments, in proportion to the number of units they own.

Mutual funds own different types of investments, depending upon their investment objectives. The value of these investments will change from day to day, reflecting changes in interest rates, economic conditions, market, and company news. As a result, the value of a mutual fund’s units may go up and down, and the value of your investment in a mutual fund may be more or less when you redeem it than when you purchased it.