What should you actually invest in inside your RESP? ETFs, GICs, mutual funds, stocks — here's a clear guide to building the right portfolio at every age.
An RESP is a registered account — a tax shelter — that can hold a wide variety of investment types. The account itself doesn't generate returns; the investments inside it do. Choosing the right investments is the second most important RESP decision after simply opening the account.
Eligible RESP investments include:
Exchange-Traded Funds (ETFs) are the gold standard for RESP investing in 2026. They offer broad diversification, very low fees (typically 0.10–0.25% MER), and are available at virtually every Canadian brokerage with no minimum investment.
| ETF | Allocation | MER | Best For |
|---|---|---|---|
| XEQT (iShares) | 100% equity | 0.20% | Age 0–12, maximum growth |
| VEQT (Vanguard) | 100% equity | 0.24% | Age 0–12, alternative to XEQT |
| XGRO (iShares) | 80% equity / 20% bonds | 0.20% | Age 10–14, moderate growth |
| VGRO (Vanguard) | 80/20 | 0.24% | Age 10–14 |
| XBAL (iShares) | 60% equity / 40% bonds | 0.20% | Age 14–17, capital preservation |
| VBAL (Vanguard) | 60/40 | 0.25% | Age 14–17 |
Guaranteed Investment Certificates (GICs) are ideal for the final 2–3 years before your child needs the money. They guarantee your principal plus a fixed interest rate, eliminating the risk of a market downturn right before tuition is due.
In 2026, 1-year GIC rates at major Canadian banks and brokerages range from 3.5% to 5.0% — a reasonable return for capital you can't afford to lose. Consider laddering GICs (e.g., 1-year, 2-year, 3-year) to provide withdrawals at different points in your child's post-secondary journey.
Actively managed mutual funds are available in RESPs through banks and advisors. They come with MERs of 1.5–2.5%, which significantly erodes long-term returns compared to ETFs. Research consistently shows that most actively managed funds underperform their benchmark index over 10+ year periods.
The exception: TD e-Series mutual funds, which are passively managed index funds with MERs of 0.33–0.44%. These are competitive with ETFs and appropriate for RESP investing — especially for TD customers who prefer the mutual fund structure over ETFs.
While you technically can hold individual stocks in a self-directed RESP, this is generally not recommended for most families. Reasons include:
Exception: Experienced investors with a strong portfolio construction skill set may choose individual stocks or sector ETFs as a portion of a larger RESP, but this should be a small allocation (under 10–15%) for most families.
| Child's Age | Recommended Allocation | ETF Choice | Rationale |
|---|---|---|---|
| 0–10 | 100% equity | XEQT / VEQT | Maximum growth, long time horizon |
| 10–13 | 80% equity / 20% bonds | XGRO / VGRO | Begin reducing volatility |
| 13–15 | 60% equity / 40% bonds | XBAL / VBAL | Capital preservation increasing |
| 15–17 | 40% equity / 60% GICs/bonds | XBAL + GICs | Protect gains for near-term use |
| 17–18 | 20–30% equity / 70–80% safe | GICs + bond ETF | Minimize withdrawal-year risk |
Historical long-term returns by asset class (approximate, before fees):
A 100% equity RESP from birth earning 7% annually on $2,500/year contributions (plus $500 CESG) would grow to approximately $85,000–$95,000 by age 18. Past returns don't guarantee future results, but the long time horizon of an RESP makes equity investing highly appropriate for younger children.
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