In this first set of scenarios, we look at what happens when we try to front-load the RESP contributions in two ways. First, we maximize the contributions as quickly as possible and second, we maximize grants as quickly as possible (while still maximizing contributions).
Prioritize Maximizing Contributions
This scenario maximizes contributions as soon as possible by making a single $50,000 contribution in the first year of the beneficiary’s life. This front-loaded maximizing of contributions receives only the single year maximum of $500 in grants from the standard CESG. But as we’ll see, the power of compounding ends up outstripping the gain of the foregone grants.
In this scenario, the account value peaks at $133,086.82.
Then, as we start withdrawing money to fund the child’s education it ends up short by $11,638.09.
These additional funds needed could come from a part-time job, co-op job or other paid internship. But all together this gets pretty close to fully funding an “average” post-secondary education.
| Year | Value | Contributions | Grants | Withdrawals | Earnings | Stocks | Bonds |
|---|---|---|---|---|---|---|---|
| 0 | $0.00 | $50,000.00 | $500.00 | $0.00 | $3,030.00 | 100% | 0% |
| 1 | $53,530.00 | $0.00 | $0.00 | $0.00 | $3,211.80 | 100% | 0% |
| 2 | $56,741.80 | $0.00 | $0.00 | $0.00 | $3,404.51 | 100% | 0% |
| 3 | $60,146.31 | $0.00 | $0.00 | $0.00 | $3,608.78 | 100% | 0% |
| 4 | $63,755.09 | $0.00 | $0.00 | $0.00 | $3,825.31 | 100% | 0% |
| 5 | $67,580.40 | $0.00 | $0.00 | $0.00 | $4,054.82 | 100% | 0% |
| 6 | $71,635.22 | $0.00 | $0.00 | $0.00 | $4,298.11 | 100% | 0% |
| 7 | $75,933.33 | $0.00 | $0.00 | $0.00 | $4,556.00 | 100% | 0% |
| 8 | $80,489.33 | $0.00 | $0.00 | $0.00 | $4,829.36 | 100% | 0% |
| 9 | $85,318.69 | $0.00 | $0.00 | $0.00 | $5,119.12 | 100% | 0% |
| 10 | $90,437.81 | $0.00 | $0.00 | $0.00 | $5,426.27 | 100% | 0% |
| 11 | $95,864.08 | $0.00 | $0.00 | $0.00 | $5,464.25 | 90% | 10% |
| 12 | $101,328.33 | $0.00 | $0.00 | $0.00 | $5,471.73 | 80% | 20% |
| 13 | $106,800.06 | $0.00 | $0.00 | $0.00 | $5,446.80 | 70% | 30% |
| 14 | $112,246.86 | $0.00 | $0.00 | $0.00 | $5,387.85 | 60% | 40% |
| 15 | $117,634.71 | $0.00 | $0.00 | $0.00 | $5,293.56 | 50% | 50% |
| 16 | $122,928.27 | $0.00 | $0.00 | $0.00 | $5,162.99 | 40% | 60% |
| 17 | $128,091.26 | $0.00 | $0.00 | $0.00 | $4,995.56 | 30% | 70% |
| 18 | $133,086.82 | $0.00 | $0.00 | $-18,377.74 | $4,129.53 | 20% | 80% |
| 19 | $118,838.61 | $0.00 | $0.00 | $-37,527.34 | $2,683.27 | 10% | 90% |
| 20 | $83,994.54 | $0.00 | $0.00 | $-38,315.41 | $1,507.41 | 10% | 90% |
| 21 | $47,186.54 | $0.00 | $0.00 | $-39,120.04 | $266.19 | 10% | 90% |
| 22 | $8,332.69 | $0.00 | $0.00 | $-19,970.78 | $0.00 | 10% | 90% |
| 23 | $-11,638.09 | $0.00 | $0.00 | $0.00 | $0.00 | 10% | 90% |
Prioritize Maximizing Grants
This scenario still maximizes contributions but also maximizes government grants (in the form of the standard CESG) by spreading out contributions over the minimum number of years needed to mazimize the grants.
In this scenario, the account value peaks at $116,257.75.
Then, as we start withdrawing money to fund the child’s education it ends up short by $30,508.89.
Like the first scenario, these extra funds would need to come from other sources of income. While not nearly as close as the first scenario, this is still a respectable level of funding for post-secondary education.
| Year | Value | Contributions | Grants | Withdrawals | Earnings | Stocks | Bonds |
|---|---|---|---|---|---|---|---|
| 0 | $0.00 | $16,500.00 | $500.00 | $0.00 | $1,020.00 | 100% | 0% |
| 1 | $18,020.00 | $2,500.00 | $500.00 | $0.00 | $1,261.20 | 100% | 0% |
| 2 | $22,281.20 | $2,500.00 | $500.00 | $0.00 | $1,516.87 | 100% | 0% |
| 3 | $26,798.07 | $2,500.00 | $500.00 | $0.00 | $1,787.88 | 100% | 0% |
| 4 | $31,585.95 | $2,500.00 | $500.00 | $0.00 | $2,075.16 | 100% | 0% |
| 5 | $36,661.11 | $2,500.00 | $500.00 | $0.00 | $2,379.67 | 100% | 0% |
| 6 | $42,040.78 | $2,500.00 | $500.00 | $0.00 | $2,702.45 | 100% | 0% |
| 7 | $47,743.23 | $2,500.00 | $500.00 | $0.00 | $3,044.59 | 100% | 0% |
| 8 | $53,787.82 | $2,500.00 | $500.00 | $0.00 | $3,407.27 | 100% | 0% |
| 9 | $60,195.09 | $2,500.00 | $500.00 | $0.00 | $3,791.71 | 100% | 0% |
| 10 | $66,986.80 | $2,500.00 | $500.00 | $0.00 | $4,199.21 | 100% | 0% |
| 11 | $74,186.01 | $2,500.00 | $500.00 | $0.00 | $4,399.60 | 90% | 10% |
| 12 | $81,585.61 | $2,500.00 | $500.00 | $0.00 | $4,567.62 | 80% | 20% |
| 13 | $89,153.23 | $2,500.00 | $500.00 | $0.00 | $4,699.81 | 70% | 30% |
| 14 | $96,853.04 | $1,000.00 | $200.00 | $0.00 | $4,706.55 | 60% | 40% |
| 15 | $102,759.59 | $0.00 | $0.00 | $0.00 | $4,624.18 | 50% | 50% |
| 16 | $107,383.77 | $0.00 | $0.00 | $0.00 | $4,510.12 | 40% | 60% |
| 17 | $111,893.89 | $0.00 | $0.00 | $0.00 | $4,363.86 | 30% | 70% |
| 18 | $116,257.75 | $0.00 | $0.00 | $-18,377.74 | $3,523.68 | 20% | 80% |
| 19 | $101,403.69 | $0.00 | $0.00 | $-37,527.34 | $2,107.92 | 10% | 90% |
| 20 | $65,984.27 | $0.00 | $0.00 | $-38,315.41 | $913.07 | 10% | 90% |
| 21 | $28,581.93 | $0.00 | $0.00 | $-39,120.04 | $0.00 | 10% | 90% |
| 22 | $-10,538.11 | $0.00 | $0.00 | $-19,970.78 | $0.00 | 10% | 90% |
| 23 | $-30,508.89 | $0.00 | $0.00 | $0.00 | $0.00 | 10% | 90% |
