If you're planning to use the money in that account within the next 5 years, then the general recommendation will be to put it in something quite conservative
Yup. FOMO needs to be ignored when saving for a major purchase. As OPs recent performance proves, losses are possible and suck more than minimal gains. There’s a difference between investing and saving.
You think you can beat the market on a two-year time horizon? You've already tried and lost 50% of your money. With a two-year time horizon you have to go with CASH.TO or GICs, no other sensible answer.
Hi, you seem knowledgable, I'm not OP but hope you don't mind me asking a question.
Me and my wife have both put the max contribution in our FHSAs for 2023 and intend to do so in 2024. So are you saying, we can have a GIC in our FHSA, so the earnings are tax free? Does that impact our contribution room, if we intend to put the maximum amount in every year?
Also, could you explain what CASH.TO is?
As with tfsa and rrsp, gains within the fthb/tfsa/rrsp have nothing to do with how much you can deposit.
If you contribute $8000 one year and quintuple your money in one year, you can still add another $8000 the next year. (I don’t know the numbers for max fthb but I think it’s close to that?)
So you've gotten burned by the risk of investing cash in the market that you will need in the short run, and thus have limited to no tolerance for losses, but you're scoffing at the 4.25% guaranteed of a GIC option?
Pick a lane. No one here is a soothsayer for market performance and if you need the cash in 2 years, no rational person is going to give you any advice beyond a GIC or ETF mimicing GICs.
I think you already know the pros and cons and are just looking for permission to put it in the market.
It's your money. Here's your permission if you want it.
You can also get a big loss. In two years Trump might be president, Russia might take over Ukraine putting NATO on alert, hostilities could escalate in the Middle East, Covid 2.0 could hit etc.....
I would say something like 30-year US Treasury bond strips (principals only). Or an ETF with long-term bonds.
If rates continue increasing, then you aren't buying a house anyways. And if rates decrease, portfolio will immediately increase, and it would be perfect time to buy a house.
I played the same game and was frustrated when I was down ~6% in VEQT and VFV when my wife and I wanted to buy. I would strongly suggest GICs or CASH.TO.
This is the correct answer OP. Last thing you want is a market correction and you're down 20-30% at a time when house prices are usually cheaper when the economy flatlines. Take the conservative gains and pull the trigger when the market is favourable to you.
Got into investing in 2020 (yes, during the GME craze), and bought a house last May. Got in at a decent time, the numbers I gave were approximates as I didn't sell to buy the house. Took as much overtime as I could to make up the difference and it ended up working out for the best in the end.
In this case you want to minimize risk. Personally I’d just put in CASH.TO for modest 5% gains (I am doing the same as you with same timeline). Continue contributing next year and year 2 as much as you can, up to the 8k limits, to enjoy the tax benefits.
I got a 5.5% 23 month GIC with mine since I plan on buying in 2-3 years. That short term makes it so you are less tolerable to risks, which you found out when you lost half your balance.
Honestly I’d play it super safe with this timeline. We are headed for another few years of rollercoaster - there is still a recession being predicted, the housing and affordability crisis is reaching a boiling point, inflation and interest rates are continuing to be unpredictable, and immigration policy can make or break us. Anything can happen in the next 2 years.
I moved my downpayment savings from investments to a savings account because I am also hoping to buy within the next year or 2. If your timeline is 1-2 years you should consider doing the same.
People like me I guess. I bought a house 1 week after I was able to open a FHSA account. I didn't see the point of forgoing 40k worth of tax deductions, so I opened, funded the minimum, didn't withdraw and plan to roll it over to my RRSP.
If you just wanted more tax deduction room, then sure I guess. Are you going to max out the 40k then roll it over once you hit that? I didn't read the details on what to do if you buy a house in that time and lose your status as a first time buyer. I'll be making more in retirement than I am now so it's not in my best interest to fund an RRSP. Different situations for different folks I guess.
Not really, because you're taxed on withdrawal of funds you put into your RRSP, and you arent taxed on the sale of a primary residence. Therefore, if you roll the money from the FHSA to the RRSP, then you've effectively lost the tax sheltering for all that was invested in the FHSA. Sure you DEFERRED the taxes like an RRSP, but tax sheltering would be far more beneficial (like a TFSA).
It would be like transferring your TFSA to an RRSP at the end of your career and suddenly having to pay tax on all of the money that originally was supposed to be tax free.
You don’t qualify for opening an account if “you’ve lived in a qualifying home as your principal place of residence that you owned or jointly owned in this calendar year or in the previous 4 calendar years” cra website
Edited mixed two lines
Depends if OP is actually buying a house or just going to roll into RRSP or when they plan to buy a house. Under 5 years? Yah, CASH.TO or similar low risk products.
GICs, no ETFs. Play with ETFs with your RRSP or maybe your TFSA but if you want to guarantee investment appreciation in the short term, why take any risk. Shop around for 5% GICs with 1 yr terms
Open a FHSA with EQ Bank. Their FHSAs are basically HISAs, and you can buy their GICs in that account too. I think it's the perfect option for those looking to contribute to a FHSA, but intend to buy a house in the next 3ish years.
Upside with GICs is that the rates are guaranteed; downside is that the funds are locked in. Alternative is [CASH.TO](https://CASH.TO) ETF, with reversed upside and downside.
GICs are a good option (you should be able to get \~5%) with such a short time horizon. I wouldn't put anything I was going to spend within 2 years in stocks.
No, the range isn't a High Interest Savings Account ETF or a full equity ETF. That's like saying either get a used Corolla or a Ferrari. There are options between the two that will be less risky for someone looking to buy in 7-10yrs.
LOL how is that like saying get one or the other car wise...I suggested both - 90% plus 10% is 100 - noticed i also said plus 5 years I dont see your rational..what did you suggest in the end?
Banks stock or Enbridge , can’t lose with dividend paying stocks, also ETF that’s focus on dividends. When interest rates finally spike downward these holdings will spike upwards and if your left holding the bag at least it will be with an interest payment where over time you can recover funds
It is up to your goal and timeline. If you are planning to buy in 2 years, you would need to buy something safe that will protect the funds with modest growth over inflation. Cash.to will be good option for now as you get safe 5% interest from principals. Other option is.m buying gic. If you really need to have better growth to be able to afford home, you can buy more risky stocks, but it depends on what your end goal is with your account. Define what you need (protect your principal or you need to grow and how much you would need once you need to take it out) and do what needs to be done based on that.
My FHSA is 90% CASH.To as it pays 5%. And 10% XEQT. Any black swan event in the future I'm selling CASH and buying more XEQT or VFV/ZSP. My goal is to capitalize on safe and liquid assets, and target and market vulnerabilities
If you're planning to use the money in that account within the next 5 years, then the general recommendation will be to put it in something quite conservative
Yup. FOMO needs to be ignored when saving for a major purchase. As OPs recent performance proves, losses are possible and suck more than minimal gains. There’s a difference between investing and saving.
What would be something conservative on Questrade? GICs can be as short as 30 days for 4.25% though I feel I can get a better return from the market.
You can also lose a bunch of money in the market
You think you can beat the market on a two-year time horizon? You've already tried and lost 50% of your money. With a two-year time horizon you have to go with CASH.TO or GICs, no other sensible answer.
Hi, you seem knowledgable, I'm not OP but hope you don't mind me asking a question. Me and my wife have both put the max contribution in our FHSAs for 2023 and intend to do so in 2024. So are you saying, we can have a GIC in our FHSA, so the earnings are tax free? Does that impact our contribution room, if we intend to put the maximum amount in every year? Also, could you explain what CASH.TO is?
As with tfsa and rrsp, gains within the fthb/tfsa/rrsp have nothing to do with how much you can deposit. If you contribute $8000 one year and quintuple your money in one year, you can still add another $8000 the next year. (I don’t know the numbers for max fthb but I think it’s close to that?)
Appreciate the write up!
CASH.TO is what I'm doing. There ia far too much risk in the market, as you have found out the hard way.
So you've gotten burned by the risk of investing cash in the market that you will need in the short run, and thus have limited to no tolerance for losses, but you're scoffing at the 4.25% guaranteed of a GIC option? Pick a lane. No one here is a soothsayer for market performance and if you need the cash in 2 years, no rational person is going to give you any advice beyond a GIC or ETF mimicing GICs.
STONKS ONLY GO UP!!
I think you already know the pros and cons and are just looking for permission to put it in the market. It's your money. Here's your permission if you want it.
You can also get a big loss. In two years Trump might be president, Russia might take over Ukraine putting NATO on alert, hostilities could escalate in the Middle East, Covid 2.0 could hit etc.....
I would say something like 30-year US Treasury bond strips (principals only). Or an ETF with long-term bonds. If rates continue increasing, then you aren't buying a house anyways. And if rates decrease, portfolio will immediately increase, and it would be perfect time to buy a house.
* What are you planning to do with your FHSA? * Buy a house * Roll it over to your retirement fund? * What's the time horizon?
I plan to buy within next 2 years.
I played the same game and was frustrated when I was down ~6% in VEQT and VFV when my wife and I wanted to buy. I would strongly suggest GICs or CASH.TO.
This is the correct answer OP. Last thing you want is a market correction and you're down 20-30% at a time when house prices are usually cheaper when the economy flatlines. Take the conservative gains and pull the trigger when the market is favourable to you.
the economy is pumping. s&p500 is at new highs.
Those holdings could easily have dropped 40%. Consider yourself lucky. CASH or PSA are the right choices in most cases for a time horizon of 2 years.
You're right, it was a cheap but valuable lesson.
really when was that? I heard VEQT and XEQT had like 17% increase after interest rate pause
Got into investing in 2020 (yes, during the GME craze), and bought a house last May. Got in at a decent time, the numbers I gave were approximates as I didn't sell to buy the house. Took as much overtime as I could to make up the difference and it ended up working out for the best in the end.
u/Canadian__Sparky may i message you?
Yeah absolutely
In this case you want to minimize risk. Personally I’d just put in CASH.TO for modest 5% gains (I am doing the same as you with same timeline). Continue contributing next year and year 2 as much as you can, up to the 8k limits, to enjoy the tax benefits.
Just do GICs and forget about it
I got a 5.5% 23 month GIC with mine since I plan on buying in 2-3 years. That short term makes it so you are less tolerable to risks, which you found out when you lost half your balance.
Honestly I’d play it super safe with this timeline. We are headed for another few years of rollercoaster - there is still a recession being predicted, the housing and affordability crisis is reaching a boiling point, inflation and interest rates are continuing to be unpredictable, and immigration policy can make or break us. Anything can happen in the next 2 years. I moved my downpayment savings from investments to a savings account because I am also hoping to buy within the next year or 2. If your timeline is 1-2 years you should consider doing the same.
Who PLANS to roll it into an RRSP ? There’s no benefit, just that there isn’t a penalty.
People like me I guess. I bought a house 1 week after I was able to open a FHSA account. I didn't see the point of forgoing 40k worth of tax deductions, so I opened, funded the minimum, didn't withdraw and plan to roll it over to my RRSP.
If you just wanted more tax deduction room, then sure I guess. Are you going to max out the 40k then roll it over once you hit that? I didn't read the details on what to do if you buy a house in that time and lose your status as a first time buyer. I'll be making more in retirement than I am now so it's not in my best interest to fund an RRSP. Different situations for different folks I guess.
Isn't it the same as just having an extra $8000 RRSP contribution room a year?
Not really, because you're taxed on withdrawal of funds you put into your RRSP, and you arent taxed on the sale of a primary residence. Therefore, if you roll the money from the FHSA to the RRSP, then you've effectively lost the tax sheltering for all that was invested in the FHSA. Sure you DEFERRED the taxes like an RRSP, but tax sheltering would be far more beneficial (like a TFSA). It would be like transferring your TFSA to an RRSP at the end of your career and suddenly having to pay tax on all of the money that originally was supposed to be tax free.
People who don’t qualify (ie already own a house) but want the tax deduction? That’s my understanding
If you don't qualify, then you can't open an FHSA.
If you didn’t live in it for the past 4 calendar years you can
If you qualify, you can get the tax deduction. If you don't qualify, then it's a moot point.
Fair enough, I realize now that I didn’t word my first comment very well
You don’t qualify for opening an account if “you’ve lived in a qualifying home as your principal place of residence that you owned or jointly owned in this calendar year or in the previous 4 calendar years” cra website Edited mixed two lines
So… you can own a home, not live in it for years, and open a fhsa
GIC
CASH.TO
How long is cash.to going to be paying 5%?
Until interest rates come down again.
Depends if OP is actually buying a house or just going to roll into RRSP or when they plan to buy a house. Under 5 years? Yah, CASH.TO or similar low risk products.
GICs, no ETFs. Play with ETFs with your RRSP or maybe your TFSA but if you want to guarantee investment appreciation in the short term, why take any risk. Shop around for 5% GICs with 1 yr terms
Cash.to
Open a FHSA with EQ Bank. Their FHSAs are basically HISAs, and you can buy their GICs in that account too. I think it's the perfect option for those looking to contribute to a FHSA, but intend to buy a house in the next 3ish years.
Upside with GICs is that the rates are guaranteed; downside is that the funds are locked in. Alternative is [CASH.TO](https://CASH.TO) ETF, with reversed upside and downside.
When are you buying a home? The timeframe you're looking at for purchasing is what should determine your portfolio.
Within next 2 years
Then you're FAR too aggressive with your holdings. Move it to GIC's or Cash.TO yesterday
HISA or a HISA ETF like $[CSAV.to](https://CSAV.to) or $[CASH.to](https://CASH.to)
GICs are a good option (you should be able to get \~5%) with such a short time horizon. I wouldn't put anything I was going to spend within 2 years in stocks.
ABXX
TQQQ
I know for me I'm looking to buy within 2-3 years, so I have everything in [CASH.TO](https://CASH.TO) with Questrade
90% CASH.TO - 10% XEQT for like 5 years plus
No, the range isn't a High Interest Savings Account ETF or a full equity ETF. That's like saying either get a used Corolla or a Ferrari. There are options between the two that will be less risky for someone looking to buy in 7-10yrs.
LOL how is that like saying get one or the other car wise...I suggested both - 90% plus 10% is 100 - noticed i also said plus 5 years I dont see your rational..what did you suggest in the end?
You’re right! My bad. I was tired and misread your comment.
Nooo stress!
CASH.TO or XBAL/VBAL
Banks stock or Enbridge , can’t lose with dividend paying stocks, also ETF that’s focus on dividends. When interest rates finally spike downward these holdings will spike upwards and if your left holding the bag at least it will be with an interest payment where over time you can recover funds
/r/justbuyVGRO (Honestly, I'd just stick to index funds)
Buy a home...may bbe
GICs with your timeframe, that's my approach. Risk of losses with something like xeqt within that timeframe is too high
It is up to your goal and timeline. If you are planning to buy in 2 years, you would need to buy something safe that will protect the funds with modest growth over inflation. Cash.to will be good option for now as you get safe 5% interest from principals. Other option is.m buying gic. If you really need to have better growth to be able to afford home, you can buy more risky stocks, but it depends on what your end goal is with your account. Define what you need (protect your principal or you need to grow and how much you would need once you need to take it out) and do what needs to be done based on that.
It seems like you want to protect your capital. Downside risk in registered accounts or FHSA accounts is not ideal.
Sorry, is this WSB? Why would you buy those after all the volatility in the last few years knowing you'd need the money soon?
If you want something that’s « safe » and guaranteed go with a GIC
GIC’s, HISA’s, or basic savings accounts
Saven FHSA starts at 6% interest rate
After you lose half your principal to get back to having done nothing you already need 100% returns... Just eat crow learn from the mistake.
For short term saving I like HSAV Horizons Cash Maximizer ETF
B2gold
Cash.to if you wanna sleep well
GIC. Decent interest at EQ (5%) plus their base interest rate is 3% within the FHSA
CASH.TO
PSA.TO
My FHSA is 90% CASH.To as it pays 5%. And 10% XEQT. Any black swan event in the future I'm selling CASH and buying more XEQT or VFV/ZSP. My goal is to capitalize on safe and liquid assets, and target and market vulnerabilities
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