Investing

Place to Park ~$240k For Five Years??

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  • Jul 2nd, 2021 9:53 pm
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[OP]
Deal Addict
Apr 19, 2010
2967 posts
1447 upvotes

Place to Park ~$240k For Five Years??

I know a lot of these threads exist, however I am hoping for some advice from some of you Investing Guru's.

Info
- Just bought a new house...current home is paid for in full...put the minimum down on our new house which leaves me with ~$240k cash after the sale of our current home.
- New mortgage is 5 years fixed at 1.69%...no sense putting a large down payment
- After the five (5) years...if rates drastically increase, will consider putting the $240k + gains down on the new house
- Both TFSA and RRSP for wife and I are maxed out...as is both our kids RESP's.
- Will not need the money at all during those five years....have a well established savings nest egg already.
- Hoping to gain some pretty good interest/gains during these five years!

Thanks!
7 replies
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Nov 9, 2013
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Edmonton, AB
I guess it depends on how much you are willing to risk - i.e. how much of that cash do you actually need in 5 years?

Personally I would probably do a GIC ladder with whatever you need in 5 years, and then put the rest into an equity index fund. It would be a barbell strategy, where you preserve the cash (albeit lose to inflation) and then try to make the gainz on the portion you can risk.
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Jan 16, 2011
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Dec 12, 2009
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OP, I think you should consider following this thread. The $240k can be added to the home equity and then you can borrow against it and get some tax write offs in the process. DGI investing will allow you to stretch the investment time horizon.


home-equity-leveraged-dividend-growth-i ... d-2455354/
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Oct 4, 2009
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kanewtz wrote: - After the five (5) years...if rates drastically increase, will consider putting the $240k + gains down on the new house

- Hoping to gain some pretty good interest/gains during these five years!
If rates have drastically increased, what makes you think there will be gains at all in 5 years and that you’ll have anywhere near 240k left to put on the house? Nominal bonds will get hammered, stocks will deflate due to higher discount rates and your new house will very likely be worth considerably less than you paid for it.

As indicated above, IF you’re going to do this(and it’s a big IF), you’re going about it the wrong way by not making the interest tax deductible.

As I posted about yesterday in a different thread, the interest rate you can borrow at is of very little consequence in a leveraged investing decision but most don’t understand this. invest-unregistered-account-early-pay-c ... #p34681401

So unless you make the debt tax deductible and invest in a 5 year GIC that pays more than your interest rate, you will be taking on risks. Just because you or certain other posters here don’t fully comprehend said risks doesn’t mean they won’t rear their heads at the most inopportune time.

Then again maybe rates will still be low in 5 years and you’ll have done well if investing in risky assets. No one knows, was just commenting on the erroneous assumption that if rates drastically rise all you need to do is apply your capital and untold profits(LOL) to your mortgage.
Deal Addict
Jun 14, 2018
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kanewtz wrote: I know a lot of these threads exist, however I am hoping for some advice from some of you Investing Guru's.

Info
- Just bought a new house...current home is paid for in full...put the minimum down on our new house which leaves me with ~$240k cash after the sale of our current home.
- New mortgage is 5 years fixed at 1.69%...no sense putting a large down payment
- After the five (5) years...if rates drastically increase, will consider putting the $240k + gains down on the new house
- Both TFSA and RRSP for wife and I are maxed out...as is both our kids RESP's.
- Will not need the money at all during those five years....have a well established savings nest egg already.
- Hoping to gain some pretty good interest/gains during these five years!

Thanks!
For only 5 years, you can't want to be putting money into equities. Too much risk in leaving the money there for such a short time. There's a real chance of losing money in such a short time frame. Best bet is to just put the money into the mortgage where you're earning a guaranteed 1.69% interest tax-free.

Otherwise, you can do half and half or whatever percentage mix you're comfortable with. Half into the mortgage and half into equities, provided you're committed to leaving the money in there for 20+ years. That's the only way to almost guarantee you won't lose money investing.
Sr. Member
Dec 8, 2020
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Toronto
OP if I were to ask you the same question, what suggestion would you have?

to answer your question on the basis that you want zero risk - then either an HISA or laddered GIC

if you can tolerate some risk

defintely nothing crypto or cryto miners, no weed stocks or any penny stocks.

A few 'take a look at's'

remember 'past performance is not indicative of future results' ... at your own risk, do your research.

PWF.PR.E

SBC

AAPL

with AAPL I would buy 1400 shares at approx $140 US & immediately sell a June 2022 covered call option at the money $140 strike price & collect $14.85/share up front - rinse & repeat on option expiry if your option gets called away or not.

or you could sell the June 2023 covered call option at the money $140 strike price & collect $22.30/share up front

https://seekingalpha.com/symbol/AAPL/options

or if you like a Canadian Bank say BNS, buy $240,000 worth & immediately sell a long covered call option. Pick up the option premium up front, collect dividends to expiry.

https://www.m-x.ca/nego_cotes_en.php?symbol=BNS*

take a look at ENB, BCE, CP ...

and no ... I wouldn't be buying index funds, that's just me
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Apr 29, 2018
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I would hold onto the cash for now. Many indicators of hyper-inflation, stock crash, property crash are coming up. Or maybe buy gold, as a transitional currency, which generally performs well in such times
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