Preparing yourself monetarily for your first home
Ready to buy your first home? It may seem like you are saving forever and nothing is increasing while saving for the down payment. That is the time that you would want to consider growing your money rather than just saving it.
If you are looking to invest, it seems like a great idea but where to start? Stock markets are never consistent with their numbers and are you really willing to put your savings at risk?
There are a few ways that we will be talking about in order for money to work hard for you instead of just sitting in your bank account looking pretty.
When you are shopping around for which bank to choose, do your research to discover if the bank meets your ultimate needs temporarily and in the long run. It is extremely important that when choosing a bank, you keep one thing in mind, you should choose one that gives you the highest rate of return. If your money is going to sit in the bank, might as well grow while its there.
In Canada, interest rates are primarily low. But think about it like this, if you have a large amount of money, even the smallest difference in interest rates can make the biggest difference.
Guaranteed Investment Certificates also known as GIC’S guarantee that in no case will you ever lose money. It might not be that you will make a lot of money on your money but your principal amount will always be safe. This investment plan lets you lock in your money for a time period, the longer you keep it there, the higher the interest rate. This is one of the best investments for someone who wants to grow their money in the long term but does not want to be in any sort of risk when doing so.
There is also something called a Registered Retirement Savings Plan (RRSP) that you can invest your money in. There are various different advantages of having an RRSP to your name
- Your contributions are all tax deductible
- Anything you invest remains tax free whilst in the RRSP
- If you are a first time homebuyer, you are able to withdraw $25,000 on a tax-free basis to put towards your first home when you take part in the Home Buyer’s Plan. If you and your spouse are buying a home collectively, you both can withdraw $25,000 individually, totalling to $50,000 altogether.
Although this Home Buyer’s Plan works as a loan and you must return it in a 15-year time span otherwise your money will be taxed.
Overall, investing your down payment can be risky if your next home purchase is not too far, considering there is a high chance you could lose money. Thus, it is better to focus on a safer investment option, such as putting your money into a high-interest savings account or choosing a GIC.
For any further questions about how to prepare yourself monetarily for your first home contact our team of professionals at 416-241-2227 or email us at firstname.lastname@example.org. Book your free consultation today!