First Christmas: The Ultimate Gift Guide

This will be the Wee Baby T’s first Christmas, and he is looking forward to it with the same excitement that a brick has about being a corner stone – none at all.  He has NO idea what’s coming, but he loves every minute of it.

I’m not trying to downplay the wonders of the holiday, and I’m not trying to be a Grinch, but buying T a gift and wrapping it will only serve to delay him playing with the box.  Want the ultimate gift for an infant?  Buy stocks.

In Canada there is a great push for investing in your child’s future.

Registered Education Savings Plans allow you to put post-tax income into an account of your choice (mutual funds, stocks, GIC, even just a high-interest savings account).  The capital gains on this investment is deferred until the child draws on those funds for school, at which point your child’s income will be low enough that they probably won’t end up paying any tax at all.  Add to that the government’s 20% match through the Canada Education Savings Grant (CESG), and over the course of 17 years you gain up to an extra $7,200.  Free.  No, really – FREE!

Worried your kid may not go to school?

No problem.  If your child declines the RESP or doesn’t use all of it, you can transfer the remaining balance to a registered retirement plan or to another child.  The government takes their matched portion back first, but there are no penalties to transferring the funds.

Still looking for that ideal gift for baby’s first Christmas?  The annual cap for the CESB government match is $2,500, but there is no limit to how much you can contribute.  Ask the parents for the account information or write a cheque.  Just don’t give it to the baby, banks won’t negotiate cheques that have been chewed up and drooled on…

Want to know more?  Need tips to help budget for a brighter future?  Finance is my day job, feel free to ask away!  Please don’t drink and drive, and have a happy and safe holiday.

Good luck out there.

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