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TORONTO, ONTARIO--(Marketwired - May 27, 2013) - As graduation season approaches for students in middle school and grade school across the country, BMO reminds Canadian parents and grandparents to consider contributing to their child's or grandchild's Registered Education Savings Plan (RESP) - rather than giving a cash gift - to reward a job well done.

"Graduation is the perfect time to think about how one will fund post-secondary education," said Robert Armstrong, Vice President, Managed Solutions and Registered Plans Strategy, BMO Investments Inc. "With the costs of a four-year university degree rising rapidly, parents and grandparents can help by earmarking cash gifts for post-secondary education. A little goes a long way, with government grants and compounded earnings adding significantly to total savings."

According to a BMO Financial Group study, more than two-thirds of Canadian parents are concerned about how they will fund their child's college or university education including tuition, room and board, books and spending money. This is not surprising given that today, a four-year university degree can cost upwards of $60,000. For a child born in 2013, costs could reach $140,000.

The study also revealed that 70 per cent of Canadians give their grandchildren, godchildren, nephews and nieces an average of $100 in monetary gifts annually.

Mr. Armstrong noted that, if two sets of grandparents each deposit $100 per year to their grandchild's RESP from the time the baby is born, the RESP could be worth up to $8,000 by the time that child turns 17**.

What makes an RESP especially appealing is that the government offers a Canadian Education Savings Grant (CESG) of 20 per cent, up to a maximum of $500 annually, on all RESP contributions. An annual RESP contribution of $2,500 results in the maximum grant.

BMO offers the following tips for Canadian parents and grandparents interested in opening an RESP:

Start Early: Apply for your child's Social Insurance Number as soon as the baby is born and then use it to open an RESP.

Mix It Up: Include a variety of investments such as cash, mutual funds, guaranteed investment certificates (GICs), stocks, bonds and exchange traded funds. BMO LifeStage Class Mutual Funds allow investors to choose different time horizons, from five to 18 years, when investing. The funds annually shift their asset mix from an emphasis on equity funds to an emphasis on fixed income and cash equivalent funds as they approach their end dates. Invested in an RESP, these types of funds provide growth in the early stages and become progressively more conservative as the child approaches post-secondary age.

Speak with a financial professional: A financial professional can help you develop a financial plan that incorporates all of your short- and long-term goals, including saving for a child's education. Together, you can determine the RESP contribution methods and strategies that are right for you.

To learn more about saving and RESPs, please visit: www.bmo.com/resp.

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*Education costs include tuition and a single residence room with meals and books, from the BMO Education Savings Calculator

**Depending on the family income, province of residence and average annual rate of return

BMO LifeStage Class Mutual Funds are offered by BMO Investments Inc., a financial services firm and separate legal entity from Bank of Montreal.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.