3 Strategies for RESP Investing

The Registered Education Savings Plan (RESP) is a savings account specially designed for parents who want to save for their child’s post-secondary education. Like with any registered savings plan, it is best to get started early with an RESP. That means parents should think about getting started when their child is very young. Grants are only available until the year they are 17. If you start late, that leaves little time to take advantage of the account.

Today, I want to look over some strategies for RESP investing going forward.

Consider a High Interest Savings Account (HISA)

Canadian investors who want to play it as safe as possible in their RESP should consider a HISA. That will allow you to churn out a set amount of income while keeping your principle. However, this ultra-conservative strategy may not be ideal especially as inflation has hit very high levels in Canada.

Seek out broad market exposure with an ETF

Index funds have performed well over the past decade. RESP investors can achieve broad exposure to the Canadian market with the iShares Core S&P/TSX Capped Composite Index ETF (TSX:XIC). Unlike a HISA, this ETF has been able to comfortably outpace inflation in recent years.

Look to dependable dividend stocks

Top dividend stocks on the TSX can offer a nice balance of capital growth and income. For example, a stock like Enbridge can be counted on to churn out income in an RESP. Its shares are up 28% year over year. It offers a quarterly dividend of $0.835 per share, which represents a tasty 6.6% yield.