Whether it’s Christmas, Thanksgiving, or the birthday of your beloved grandchild, you always strive to get them the best gift out there.
While your little one would probably like a toy or a game this holiday season, their older selves would prefer a gift that gives greater monetary value, perhaps something that is worth the investment for you as well.
But the question that remains is, what can be the best gift for your grandchild worth the investment? Keep on scrolling to find out. Child Plan ™ Participating Whole Life Insurance, along with helping you save taxes, also ensures that your grandkid receives a tax-free dividend every year. Click here to request an illustration form.
Investment gifts for your grandchildren
Here are some investment vehicles you can use to save up for your grandkids:
Registered Education Savings Plan
A Registered Education Savings Plan or RESP is a great tool that helps families, including grandparents, save and invest money for a child’s post-secondary education.
The great thing here is that an RESP is a tax-free investment tool. Besides, post-secondary education can be extremely expensive, which is why many Canadian grandparents start an RESP for their grandchildren.
Moreover, the maximum CESG grant is limited to 20% of the contribution not exceeding $500, limiting the recommended RESP contribution to up to $2500 per year. As such, the scope of annual contribution in an RESP is limited.
Registered Retirement Savings Plan
A Registered Retirement Savings Plan or RRSP is another choice for a gift for your grandchildren. The cash you gift to your grandchild’s RRSP can grow and compound while remaining tax-deferred until they decide to make use of the funds.
With the Home Buyer’s Plan, your grandchild can use the money to purchase a home as a first-time homebuyer. Moreover, the Lifelong Learning Plan can allow them to use the RRSP fund to pay for a full-time education program.
Moreover, the impact on income-tested benefits, limited contribution room, low flexibility, mandatory withdrawal age of 72, etc., are a few things to keep in mind while going for an RRSP.
However, given the contribution constraints and complicated fund withdrawal process, it can be wiser to put your money in an investment option that provides better ease for both- contribution and withdrawal.
In-trust account
Another investment gift for your beloved grandchild could be a Trust Account.
It is pertinent to mention that persons under the age of majority are not allowed to invest in Canada’s stock market independently.
Nonetheless, an adult can open and operate a trust account on behalf of a minor to invest in the stock market in Canada. Depending on the user’s needs, a trust account might be formal or informal when the minor beneficiary receives complete access to control and funds once they reach the age of majority.
However, there are no guidelines regarding how an In-Trust account should be managed. If the beneficiary feels there’s an irregularity in fund management, they can sue the trustee. Moreover, the beneficiary may go to court if the contributor closes the account despite knowing that the fund is an irrevocable gift.
Buy a whole life insurance policy
The Child Plan is a perfect example of how you can do both- insure your grandchild’s future and save on taxes. Besides, your grandchild can use the Child Plan fund for financial needs like education, purchasing a home, starting a business, and much more.
Which investment gift is the most beneficial?
When it comes to selecting a gift worth the investment for your grandchild, you would need something that proves to be a financial asset for your grandchild and could benefit you in terms of saving taxes.
While all the gift ideas mentioned earlier possess the capability to accumulate wealth for your grandchild that can be used in one way or another, a life insurance policy with great inherent benefits can be an alternative option. For instance, you can open a Child Plan for your grandchild. Child Plan ™ is a whole life insurance plan that is also tax-free.
Moreover, the Child Plan ™ allows grandparents to have a say in how their grandchildren will use the fund even when it is transferred to grandchildren’s names. Here are some facts about Child Plan ™:
- Grandparents can open a Child Plan ™ for their grandkids anytime after 14 days of birth.
- Personal or corporate funds can be used to fund the Child Plan ™
- From the day it’s opened, the plan produces yearly tax-free dividends for the rest of your grandchild’s life.
- Grandparents over the age of 64 can contribute to the Child Plan ™ with non-registered RRSPs or RRIFs.
- Child Plan ™ is a tax-free way to pass money down to your future generations.
- As the owner of the Child Plan ™, you manage the cash values until you transfer ownership tax-free and fee-free to your grandchild.
- From the day Child Plan ™ is started, the value of permanent fully paid-up life insurance grows throughout your grandchild’s life.
- You can gift Child Plan ™ to your grandchild tax-free to retain in trust for your grandchild at any time.
- Pre-funding a Child Plan ™ in full can save you up to 25% on the overall cost.
Your Grandchild’s Future
Every grandparent wants to ensure the financial security of their grandchildren’s future. That’s why gifting an investment-worthy gift is the best step a grandparent can take in the direction of securing their grandkid’s future.
While options like RESP, RRSP, In-Trust Account, etc., make a great choice for some, Child Plan ™ Participating Whole Life Insurance offers an alternative option for grandparents looking for a financial gift for their grandchild.