XEQT in an RESP: A Simple Strategy for Your Child’s Education

If you’re a Canadian parent looking to invest for your child’s education, holding XEQT in a self-directed RESP is one of the simplest and most effective strategies available. You get free government grants, tax-sheltered growth, and global diversification — all in a single ETF.

This guide covers everything you need to know: how RESPs work, why XEQT fits, how to maximize the CESG, and how to adjust your strategy as your child gets closer to post-secondary.

Fast answer

• Yes, you can hold XEQT in an RESP at any self-directed brokerage (Wealthsimple, Questrade, etc.)
• Contribute $2,500 per year per child to get the maximum $500 CESG (free government money)
• XEQT works well for children ages 0–10 when you have a long time horizon
• Shift toward bonds or cash as your child nears post-secondary (ages 11–17)
• Withdrawals for education (EAPs) are taxed in the student’s hands — usually at a very low rate

How RESPs work (the basics)

A Registered Education Savings Plan (RESP) is a tax-sheltered account designed for saving toward a child’s post-secondary education. Here’s what makes it special:

How the tax shelter works:

1. Contributions are made with after-tax dollars (no tax deduction like an RRSP)
2. Growth inside the account is completely tax-free while invested
3. CESG — the government adds 20% on the first $2,500 you contribute each year
4. Withdrawals for education (called Educational Assistance Payments, or EAPs) are taxed in the student’s hands — and since most students have little income, they often pay zero tax

The CESG alone is an instant 20% return on your money. No investment in the world guarantees that.

Why XEQT is a great fit for an RESP

XEQT and RESPs are a natural pairing, especially when your child is young. Here’s why:

Long time horizon. If you open an RESP at birth, you have 17–18 years before the money is needed. That’s longer than most retirement savings timelines at the point of investment. A 100% equity allocation like XEQT makes sense when you have that much runway.

All-in-one simplicity. With a newborn, a toddler, and life happening around you, the last thing you need is a complicated portfolio. XEQT gives you 9,000+ stocks across the globe in a single purchase. No rebalancing, no second ETF, no spreadsheets.

Low cost. XEQT’s 0.20% MER keeps more of your returns. Over 18 years, the fee savings compared to mutual funds (often 1.5–2.5% MER) or group RESPs can amount to thousands of dollars.

Automatic rebalancing. XEQT rebalances its underlying holdings for you. As markets shift, iShares adjusts the allocation between Canadian, US, international, and emerging market equities — you don’t have to lift a finger.

XEQT vs other RESP investments

Not sure if XEQT is the right choice? Here’s how it stacks up against common RESP investment options:

How to maximize the CESG

The Canada Education Savings Grant (CESG) is the single biggest reason to prioritize RESP contributions. Here’s how to get every dollar available:

The basic math

• Contribute $2,500 per year to get the full $500 CESG (20% match)
• That’s $208.33 per month if you automate it
• The CESG lifetime maximum is $7,200 per child
• At $500 per year, it takes 14.4 years to max out (from birth to around age 14)

Catch-up contributions

If you missed years, you can carry forward unused CESG room. The catch-up rules:

• Maximum CESG per year: $1,000 (catches up one missed year at a time)
• To get $1,000 CESG: Contribute $5,000 that year
• You can only catch up one year at a time — there’s no way to get all missed grants in a single lump sum

Additional CESG for lower-income families

If your family net income is below $55,867 (2024, verify current thresholds), you may qualify for the Additional CESG — an extra 10–20% on the first $500 contributed. Some provinces also offer additional grants (like the BC Training and Education Savings Grant or the Quebec Education Savings Incentive).

RESP strategy by your child’s age

This is the most important section. Your XEQT allocation should change as your child ages:

The simple approach: If managing a gradual shift feels complicated, you can use iShares all-in-one ETFs as stepping stones:

• Ages 0–10: XEQT (100% equity)
• Ages 11–14: XGRO (80% equity / 20% bonds)
• Ages 15–17: XBAL (60% equity / 40% bonds) or GICs

This way you still only hold one ETF at a time — just a different one as your child ages.

How to buy XEQT in an RESP

Setting up is straightforward. Here’s the step-by-step:

1. Open a self-directed RESP at Wealthsimple or Questrade (both offer commission-free ETF purchases)
2. Add your child as the beneficiary — you’ll need their SIN (Social Insurance Number)
3. Choose family or individual RESP — family is more flexible if you have multiple children
4. Set up automatic deposits of $208.33 per month (or $2,500 per year in whatever schedule works)
5. Buy XEQT with each deposit — on Wealthsimple, you can set up recurring buys to automate this completely
6. Verify your CESG appears in your account — it usually arrives within 4–8 weeks of your contribution

For a detailed walkthrough of automating purchases, see How to Automate XEQT on Wealthsimple.

Tax rules when you withdraw

Understanding RESP withdrawals is critical for maximizing your money. There are two types of withdrawals:

1. Educational Assistance Payments (EAPs)

EAPs include the CESG grants + investment growth. These are taxed in the student’s hands as income.

• Most full-time students earn very little, so EAPs are often taxed at 0% or a very low rate
• The basic personal amount (approximately $15,705 in 2024, verify current amount) means a student can receive significant EAPs tax-free
• There’s a $8,000 limit on EAPs in the first 13 weeks of enrollment, then no limit after that (verify current limit)

2. Post-Secondary Education Payments (PSE)

PSE withdrawals are your original contributions coming back. These are always tax-free — you already paid tax on this money before contributing.

What if your child doesn’t go to school?

If the beneficiary doesn’t pursue post-secondary education, you have options:

• Transfer the RESP to another child (family RESP makes this easy)
• Transfer up to $50,000 of growth to your RRSP (if you have contribution room)
• Withdraw contributions tax-free (they were after-tax dollars)
• CESG must be returned to the government
• Remaining growth withdrawn as income is taxed at your marginal rate + a 20% penalty

This is another reason a family RESP is often the better choice — if one child doesn’t use the funds, a sibling can.

Common mistakes to avoid

Frequently asked questions

Can I hold XEQT in an RESP?

Yes. Any self-directed RESP at a brokerage like Wealthsimple or Questrade lets you buy XEQT just like you would in a TFSA or RRSP.

Is XEQT too aggressive for an RESP?

For children under 10, a long time horizon makes 100% equities reasonable. As your child approaches post-secondary, gradually shift toward bonds or cash to protect gains.

What happens to the CESG if my child doesn’t go to school?

The CESG must be returned to the government. Your contributions come back tax-free, and investment growth can be transferred to your RRSP (up to room available) or withdrawn as taxable income with a 20% penalty.

Should I use a family RESP or individual RESP?

A family RESP is more flexible if you have multiple children, since unused funds for one child can be redirected to a sibling. An individual RESP works fine for a single child.

How much should I contribute each year?

Contribute at least $2,500 per child per year to maximize the $500 annual CESG. If you have carry-forward room, you can contribute up to $5,000 per year to catch up on missed grants.

Is it too late to start an RESP if my child is already 10?

Not at all. You still have 7–8 years of growth ahead, and you can catch up on missed CESG grants by contributing $5,000 per year. You’ll want to start shifting to conservative investments a bit sooner than someone who started at birth.

Related reading

• What is XEQT?
• XEQT for Beginners
• How to Automate XEQT on Wealthsimple
• XEQT vs GICs: Which is Better for Canadian Investors?
• Best ETFs to Pair with XEQT
• Lump Sum vs Dollar Cost Averaging for XEQT

Final next step

Every year you wait costs your child $500 in free CESG grants and years of compound growth. Pick one action today: open the RESP, automate your first contribution, or buy your first shares of XEQT.

Disclosure: This post contains referral links. I may receive compensation if you sign up through these links, but this doesn’t affect my recommendations. A self-directed RESP with a low-cost ETF like XEQT is genuinely the best approach for most Canadian families.