Investment strategies for HBP

[hoost]

I am looking to purchase a home within the next 2 years and I am wondering how I should invest my money to achieve the highest rate at a relatively low risk level. My plan was to save 800 / mnth to RRSP that would be used for HBP and another 200 / mnth to an actual retirement fund. Is this a good strategy for saving up for a downpayment or is there a better alternative? I am in the 50K salary range.

[ray420]

I am looking to purchase a home within the next 2 years and I am wondering how I should invest my money to achieve the highest rate at a relatively low risk level. My plan was to save 800 / mnth to RRSP that would be used for HBP and another 200 / mnth to an actual retirement fund. Is this a good strategy for saving up for a downpayment or is there a better alternative? I am in the 50K salary range.

I think it depends on many things, is the HBP the only source for your downpayment? How big of a downpayment you want? and maybe how long till retirement?

If you young and just at early stages of your career i'd say the bigger down payment the better and after that work on your retirement building

[hoost]

I think it depends on many things, is the HBP the only source for your downpayment? How big of a downpayment you want? and maybe how long till retirement?

If you young and just at early stages of your career i'd say the bigger down payment the better and after that work on your retirement building



I am fresh out of school so I have I would say 30-35 years till I retire. I know that the max you can take out is 20k so my plans were to max that out and save whatever else I can.

I should also note that I am putting 10% of my income a year into TFSA mutuals funds. My goal is to do this for 20 to 25 years and that way I can couple my RRSP and TFSA when I retire. My initial thoughts was to draw my RRSP's at the lowest tax bracket and make up the difference through TFSA.

[MisterJ]

I am fresh out of school so I have I would say 30-35 years till I retire. I know that the max you can take out is 20k so my plans were to max that out and save whatever else I can.

I should also note that I am putting 10% of my income a year into TFSA mutuals funds. My goal is to do this for 20 to 25 years and that way I can couple my RRSP and TFSA when I retire. My initial thoughts was to draw my RRSP's at the lowest tax bracket and make up the difference through TFSA.

The max. you can take out was increased to 25K recently back in January or February of this year. http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html

I'm in a very similar situation as you are (only I'm three months away from closing on my house), and my strategy was to max. out my RRSP contribution until I either a) had gathered 25k in my account, or, b) used all of my contribution room.

I didn't want to put my money into my RRSP and not be able to withdraw it to use for my down-payment.

You could get into the debate that if the return you make on your investments is larger than the interest rate being charged on your mortgage, then it doesn't make sense to pay down your mortgage. It's all up to your comfort levels and expectations (and your spouse if you have one!).

[asdfvcx]

I am looking to purchase a home within the next 2 years and I am wondering how I should invest my money to achieve the highest rate at a relatively low risk level.
This question is impossible to answer unless you clearly indicate what you mean by "relatively low risk level".

Nearly all experts agree that money needed within 2 years should be held in safe investments such as a savings account or a money market account.


So, I guess I better question to ask is how much of the down payment savings are you prepared to lose?

[ray420]

This question is impossible to answer unless you clearly indicate what you mean by "relatively low risk level".

Nearly all experts agree that money needed within 2 years should be held in safe investments such as a savings account or a money market account.


So, I guess I better question to ask is how much of the down payment savings are you prepared to lose?

Agreed! if you only have 2 years for purchae than stay away from the markets and stick with GIC's or anything secured.

Other than that yea RRSP maxing to $25K and than other vehicles would be a good idea. Now issue you may have is that in 2 years you maybe in a higher tax bracket and when you make your RRSP contribution you will have to pay off the HBP plan first and wont get the deduction on the higher income, but that's not the important part.