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$80,000.00 Settlement Advice

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  • Sep 6th, 2021 10:50 pm
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[OP]
Deal Addict
Dec 23, 2005
2152 posts
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Canada

$80,000.00 Settlement Advice

My daughter is 23 and just completed her degree. She received a $80,000 insurance settlement a couple weeks ago which she has put in a savings account. She wants to use it towards buying a home in a few years. She is wondering if there is something better she could put in in rather than a savings account until she needs it for a down payment. Worried if she has easy access to it in a savings account she my dwindle it away.

I was thinking a good balanced etf portfolio but if needs it in a couple years and market is down maybe not a good choice?

What would a financial advisor advise her?

Thanks in advance.
7 replies
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Mar 10, 2018
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title was kinda confusing for me. it investing that money. Whatever you want to do do it as soon as possible. On other hand the home prices are going to increase exponentially so only stock market can match it. But money is where risk is.

balanced etf portfolio is good but how much you will get from that in about year?
Jr. Member
Mar 12, 2017
184 posts
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VBAL of you want to be on the safer side?

I'm personally not a fan of just a bond ETF. Seems like inflation will eat a lot of it away, plus houses can go up faster than the bonds and bonds can go down too.

I mean if you put it in the market, there is always some risks involved, but I would personally rather have the best yield and just push back the buying of the home by a year IF the market crashes right before I want to buy a home. Even with the covid crash, it only took VEQT/XEQT and VGRO/XGRO about 6 months to get back on track.
Last edited by leolozon on Sep 6th, 2021 9:25 pm, edited 1 time in total.
Jr. Member
Mar 12, 2017
184 posts
114 upvotes
callernamet wrote: title was kinda confusing for me. it investing that money. Whatever you want to do do it as soon as possible. On other hand the home prices are going to increase exponentially so only stock market can match it. But money is where risk is.

balanced etf portfolio is good but how much you will get from that in about year?
She's just 23, I didn't get the impression that she was ready to buy a house anytime soon.

Not being risk adverse, I would personally invest it in an equity ETF. Buying a house is rarely : "It has to be done right now, I need the money at this instant!"

She can always sell the ETF in 4 years and go for something "safer".
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Feb 8, 2014
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She could put it in her RRSPs, she might have some unused contribution room or will once she starts working.
Of course that needs investing as well but can be used for the home buyer plan.

You could also look at a segregated fund, though i don't know that much about them so can't really recommend it.
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Investing in the market with a short time horizon is very dangerous, unless the timeline for needing money can be flexible. If there is a drawdown, it could take up to 2 years for a full recovery.
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Oct 13, 2006
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Max out available TFSA contribution room; set some aside for RRSP to be used towards first time homebuyers once her income increases (max $35k); use the rest left over to invest (will depend on risk tolerance)

The first time homebuyers can be used towards the downpayment; the TFSA could be used for emergency funds or annual lump sum payment towards mortgage (assuming she has a mortgage)
Last edited by amplified on Sep 6th, 2021 10:50 pm, edited 1 time in total.
Sr. Member
Feb 7, 2004
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St Thomas
Quentin5 wrote: She could put it in her RRSPs, she might have some unused contribution room or will once she starts working.
Of course that needs investing as well but can be used for the home buyer plan.

You could also look at a segregated fund, though i don't know that much about them so can't really recommend it.
If she’s not working or not making a lot at current time the money would probably be better invested in a TFSA first if she has room. It would be easier to gain access to the money as needed. I get the home buyer thing but RRSP’s are most advantageous when you are in your prime earning years. If you decide you need the money for something else it’s harder to get at. People generally forget about the withholding tax plus income tax that eats away at your RRSP.

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