What are the best options for an RESP for my 2 year old kid?
Since your child is 2, he has a long time horizon for investment.  Assuming the savings will be used at age 19, that's 17 years.  So, I think your best bet is to invest primarily in equities (i.e. stock-based funds) and inside an RESP. Why equities?  Historically, equities have outperformed debt and cash over longer time periods.  But, equities can be volatile in the short term. So, do purchase some fixed-income investments (e.g. 30% government bonds and money market funds), and do also spread your equity money around as well -- e.g. buy some international funds in addition to Canadian funds.  Rebalance every year, and as your child gets closer to university age, start shifting some assets out of equities and into fixed-income, to reduce risk.  You don't want the portfolio torpedoed by an economic crisis the year before the money is required! Next, why inside an RESP? Finally... what if your kid doesn't attend post-secondary education?  First, you should probably get a Family RESP, not a Group RESP.  Group RESPs have strict rules and may forfeit contributions if your kid doesn't attend.  Have a look at Choosing the Right RESP and Canadian Capitalist's post The Pros and Cons of Group RESP Plans. In a Family plan, if none of your kids end up attending post-secondary education, then you forfeit the government match money -- the feds get it back through a 20% surtax on withdrawals.  But,  you'll have the option of rolling over remaining funds into your RRSP, if you have room.
Group RESPs are a bit like a true mutual insurance company. You all pay into the fund, and then, depending on the number of kids that are in school that particular year, you get paid a certain amount. Advantages could be that if you end up with one or two years of only your kid in school and nobody else's in that age bracket, you get more money. Disadvantage for the same-reverse reason also could be true. Another advantage of regular programs, unlike pooled, is that if you do not use all the money, then some/all of the remaining funds may be transferable to an RRSP. Personally I would not invest in one, unless it was more like a specific investment-club that I knew everybody. I have lived in communal houses. Most people don't want roommates. Especially if that means having several kids.  I feel like your arguments are practical, I suppose, but not realistic. If I had 3 kids right now, if anything I would probably be earning less money because my flexibility would be much less. I couldn't pursue an education to earn more money because I would still have bills to pay for my kids. My parents are poor, and they live in an area that my job options would be about 3, and none would pay much more than minimum wage. I am 26, but I have known plenty of 19 year old single moms who just aren't able to get a job that pays well enough to support them, and again, they have few options to develop new skills. I guess you can say it is their fault, but we can hardly say that subway shouldn't have to pay them overtime or what is really less than a living wage. Economists and reality have shown us time and time again that more wages overall means a healthier economy. Every state that has raised wages in the past few years is better off because of it. Every state that has done so has seen their economy grow, and joblessness go down. From what I understand (I never had an RESP but would consider one for a future child), with the right type of withdrawal, you can use the RESP money for anything education related. Basically, know that the RESP is considered to have three compartments within it: (1) your contributions, (2) contributions from the government through the Canada Education Savings Grant (CESG), and (3) the return on the investment, or accumulated earnings. The government contributes an extra 20% on top of your contributions annually by way of the CESG, up to a $500 max. Tuition As you noted, official tuition fees, reported on a fee slip, is where one large chunk of the RESP will go. This will be pulled out of your original contributions and is known as a Post-Secondary Education (PSE) Withdrawal. Different RESP administrators (bank, discount brokerage, etc) determine what sort of proof of enrolment would be required, but it ought to be similar between them and different educational institutions. This withdrawal is not taxable by either you or the student, since the contributions were made with after-tax dollars. Educational Assistance Payments (EAPs) EAPs are for other expenses that the student would incur by being at university. In the first 13 weeks of studies, you can request up to $5000 in EAP withdrawals (full-time studies, $2500 for par-time), after which there is no limit. Each EAP payment is made up of the CESG and accumulated earnings portions of the RESP, whose proportions are determined based on the EAP amount. This is considered taxable income for the student, or beneficiary, in the year the EAP withdrawal is made. It gets a bit fuzzy here, from my understanding. The student would ostensibly be able to purchase anything that they could rationalize as education-related, and I'm not sure what sort of proof different banks would need. Maybe just the confirmation of enrolment is enough. This is the part of my post that should directly answer your question which, using this terminology, boils down to what sorts of expenses can I use the EAP withdrawals for? To this, from what I've read out there, I would say that you could probably purchase anything. From the student's point of view, they are enrolled in a qualifying education institution, and if they don't spend the money on education-related purchases, money required for those purchases will have to come from somewhere else anyway.  Other withdrawals Any other type of withdrawal is like walking through a minefield. You can withdraw the original contributions without paying tax on them, but you would need to pay back the corresponding CESG back to the government. Other types of withdrawals would be taxable and may incur a 20% penalty. I don't have any more details on that. As I mentioned, this is from what I've read and looked into for future RESP purposes. A new concept that has popped up is RESP vs TFSA. The TFSA provides the same tax shelter (after-tax dollar contributions, no tax on the gains), but also allows for no tax on the withdrawals. To add to that, the TFSA withdrawals are tax-free as well. The main benefit that the RESP offers that the TFSA doesn't is the CESG. My current opinion (and I could be wrong) is that you should contribute $2500 annually to the RESP in order to get the $500 max CESG, and anything else that you'd like to contribute should go in a TFSA. But I digress. Hopefully my long-winded response makes some sense. Enjoy. "**Q: ""Why aren't you giving your grandmother children before she dies?""**  A: Stop being selfish, it's my life and I decide what I want to do, whenever I want to.  **Q: ""I bought a house at 23. Why are you still renting?""**  A: I want to be very wealthy, and not have my own house owned by a bank for 3/4ths of my life. Worry about your own life.  **Q: ""Who is going to take care of your parents when we they get old?""**  A: I'm going to be doing that, and my parent's retirement will help. I'm going to be able to do that because I decided to be financially intelligent rather than indulge in selfish personal pride and temporary happiness.  **Q: ""If you don't have X by age Y, then there's something wrong with you""**  A: Fuck you, I'm rich. Have fun with your wife and kids while you slave away hoping for a raise someday and pray for the weekends to come.  -----------------------------------------------------------------------  I've used all of these except the parents getting old situation. Stop letting other people dictate what's important in your life. If your parents are mad that you won't have kids or get married, fuck them. You got a nice loft, an AMG Mercedes, a Lexus, saving for a Lamborghini, and enough money in the bank to make people feel inferior just by looking at your account balance. Not to mention that's it's completely possible to have casual, safe sex with many women nowadays.   But hey man, make your family happy and appease society. Lol, hope it works out for you." "In my opinion, whichever plan or commodity system you use is just supplemental to a very simple thing: go to your bank's online account, set up a regular transfer (monthly in my case, maybe weekly for you depending on when you get your salary in your country/state) to a savings' account in your kid's name with a decent rate, and just watch it grow. Then adjust to salary fluctuations if needed. Also, prefer a tax-free savings account. Been working fine for me for my oldest who's now 4 yo. Started by saving only a little each month and increased as our financial pressure eased up a bit. For his sister, I already set up a similar thing and I will ""equalize"" both accounts with additional payments over time (Hmm, actually, maybe that's not fair and they just need to be ""equalized"" in that they both have the same amount for a given age... but that's another question). Another option, which I set up for my oldest but not for his sister was a child trust fund with an initial payment. We moved countries and I don't find a plan that I find similarly attractive here, and the other one is locked until 18 yo. But, as with all portfolios, it comes with a risk. Note that I don't live in the U.S. in the land of crazy college fees. Though I've studied myself in countries where fees were already a drag (and I'm being polite) for various fields (IT and music studies, anyone?), I have to say when I see fees for the big league universities and colleges in the U.S. I am kind of shocked. Doable, but good luck with that and with your loans." Keep paying down the bills.  Attack them by balance (lowest first) or by interest rate (highest first).  Talk to a local chapter of the National Foundation for Credit Counseling to see if they have any ideas.  Perhaps you are a candidate for bankruptcy or some other drastic measure if you have a steady living situation and steady employment. (I wouldn't know, but honestly if your score can't get much worse so there isn't much to lose) You are doing the best you can and because you care enough, you will do great and adjust going forward. As a dad myself, don't worry about paying for your kids school or showering them with entertainment.  Of course they need some, but time with you and knowing you are always there and stable will mean much more than buying their books.  The best gift you can give your kid is a future where they don't have to support you, which is sadly more common than we sometimes think. You don't have to do the prepaid PP card, just get him his own PP account and then order him the PP debit MC. It will act as a debit on his PP account just like the Student Account card. Invest in kids, not pension - they never inflate. Without kids your retirement will be miserable anyway. And with them you'll be good. Personally, I do not believe that that our current savings will be worth it in 30 years in these times.