What is a primary benefit of contributing to an RESP?

Contributing to a Registered Education Savings Plan (RESP) provides significant tax advantages for the contributor, making it a beneficial choice for those saving for a child's education. The money contributed to an RESP grows tax-free until funds are withdrawn to pay for eligible educational expenses. This means that the investment compounds over time without being diminished by taxes, leading to a more substantial amount available when the beneficiary enrolls in post-secondary education.

Additionally, contributions to an RESP can attract government grants, such as the Canada Education Savings Grant (CESG), which adds to the savings without any immediate tax implications for the contributor. This combination of tax-free growth and potential government support makes the RESP an effective tool for long-term educational savings.

Other options indicate benefits that do not align with the nature of an RESP. Guaranteed returns are not a feature of investment vehicles like RESPs since they are subject to market fluctuations, and funds in an RESP cannot be accessed immediately for personal use without tax implications. Furthermore, liquidity may not be high depending on the investment choices within the RESP, as specific terms and conditions apply regarding when and how funds can be accessed.