Investments
These can be the three different ways to inherit your $25,000.
1. RESP
Types of RESPs
Family plan RESP
-Can name more than one child as a beneficiary
-Must be your child, grandchild, great-grandchild or sibling, by birth or adoption.
Individual plan RESP
-Allows only one child to be named as beneficiary.
-Does not have to be related to you.
Benefits of an RESP
The money is there when you need it
-Start early and contribute; you'll have the funds you need, when you need them
Government contributions
-May add contributions to a maximum of $500 per year, per child
Tax-sheltered Growth
-Not tax-deductible
-All investment income generated is tax-sheltered
Flexibility
-Can decide on how much or when the money should be withdraw
-Can be used for tuition, books and living expenses.
Tax savings
-Plan earnings are to be taxed, when money is used for post-secondary education
-May pay little or no taxes on the money.
2. TFSA(Tax Free Savings Account)
-Pay no taxes on the interest or investment income
-Can re-contribute the amount of withdrawal
Benefits
-Grow your savings tax-free
-Interest is is paid monthly and calculated on full daily closing balance.
Automatic deposits
-Set up a recurring deposit for a faster, more convenient way to save.
Flexible access to your money
-Can make tax-free withdrawals at any time
No fees
-Don’t pay any fees on account, unless transfer TFSA funds to another financial institution ($100 fee applies).
Minimum Investment: $25
-On new deposits: Annual Interest Rate with bonus: 2.00 % (limited time offer expires March 31, 2015)
3. GICs (Guaranteed Investment Certificates)
Types of GICs
Cashable GICs:
-Gives flexibility to access money; while still earning a rate of return.
-CIBC Flexible GIC®:
-Fixed interest rate
-Flexibility to access your money at any time.
-CIBC Cashable Escalating Rate GIC® (3- or 5-year):
-Increasing annual interest rates over term
-Access your money on anniversary date
-CIBC Variable Rate GIC:
-Interest rate linked to CIBC Prime Rate
-Flexibility to withdraw funds at any time after 30 days, with interest.
-CIBC Redeemable GIC:
-Fixed rate; withdraw your money at any time with specific early redemption rates.
Non-redeemable GICs:
-Offer a higher rate of return.
- CIBC Bonus Rate GIC®:
-Earn rate above regular rates on short and long terms
-CIBC Escalating Rate GIC® (3- or 5-year):
-Premium returns over 3- or 5-year term
-Increasing annual rates
-CIBC Long-Term GIC:
-Fixed rate for terms from 1 to 7 years
-CIBC Short-Term GIC:
-Fixed rate for terms from 30 to 364 days
-CIBC Save-Up GIC:
-Save for specific goals with regular investment plan.
-CIBC EasyBuilder GIC™:
-Maximizes returns
-Access to funds and reduces exposure to changing interest rates.
CIBC T-Bill Rate GIC:
-Make larger investment from 90 to 100 days; offers higher interest rates for higher balances
Index-linked GICs:
-Take advantage investing in stock markets
-With full protection of your principal.
-CIBC Stock Market Advantage® GIC:
-Higher return based on the performance of a leading Canadian market index.
Market Linked GICs:
-Take advantage of the growth of a market-linked return
-With full protection of your principal.
The Investment Choice
The best investment to inherit $25,000, would be to invest in RESP because it is an individual plan only for students that will be going into post-secondary education/training. With this investent, not only will the savings grow over the years, but the government will contribute money to this investment as well. In addtion, there is no limit to how much money you want to withdraw and you can have access to the money at any time. As well as, if your first child drops out of school, you can still continue to save your money for your next child.