Market Volatility and Your RESP: What You Need To Know

Planning ahead for your child’s education is a smart move—and starting early makes all the difference.

But what happens when markets go up and down? That’s what we call market volatility. It’s the normal movement in prices of investments like stocks and bonds, driven by things like economic changes, interest rates, and world events. Sometimes the changes are small, and sometimes they’re big. The bigger the changes, the more “volatile” the market is.

Why Does Volatility Matter for Your Embark RESP?

When you contribute to your plan, your money is invested in Exchange-Traded Funds (ETFs)—which are like baskets filled with different investments such as stocks, bonds, and cash. These baskets help spread out the risk. If one investment isn’t doing well, others in the basket may do better and help balance things out.

Why You Shouldn’t Worry About It

Volatility is completely normal. And the good news is, your Embark Plan is designed to handle it.
BMO – our asset manager, manages the risk by balancing stocks (which have more ups and downs) with bonds and cash equivalents (which tend to be more stable). For example, when stocks are more volatile, the steadier returns from bonds can help keep your savings on track. BMO keeps an eye on the market for you and makes small adjustments to ensure that your savings are on track.

Even better, Embark uses a glidepath approach. This means that as your child gets closer to needing the funds for school, the investments are automatically adjusted to become more conservative. So, your money has added protection as the goal gets closer.

What is the Glidepath?

Here is how to think about the Glidepath approach:

Imagine you’re going on a long slide at the playground. At the top, the slide is steep and fast, but as you get closer to the bottom, it gets smoother and slower so you can land safely.

The glidepath is kind of like that slide—but for money! When you’re far away from using the money (like when your child is still young), we go a little faster and take more chances to grow the money (like going down the steep part). But as your child gets closer to needing the money for school, we slow down and make things safer (like the end of the slide), so you don’t fall or lose what you’ve saved.

It helps make sure your money lands safely, just like a child does at the bottom of the slide.

Is Now a Good Time to Buy?

Periods of volatility often present great opportunities. When markets dip, it may be a chance to buy investments at a lower price—so when they recover, your savings could grow even more. With a long-term plan like the Embark Student Plan or the Embark Select Conservative plan, sticking to regular contributions through the ups and downs can really pay off!

Key Takeaway

No one can predict the future, but understanding how volatility works can help you feel more confident. The goal is to keep your child’s education savings growing steadily and safely, with smart decisions and a long-term outlook.