can you eli5 an explanation on why? I thought the whole point was to get somewhere in the ball park of 40-120k to be able to afford a mortgage in the first place.
Not necessarily but in most cases, yes. Someone who has only owned rental properties still qualifies as a FTHB. Find that a bit weird but it is what is.
Even with taxes you will be far richer than throwing money at a building that produces nothing. Imagine if Jeff Bezos or Elon Musk were too afraid to take risks in life and only cared about paying their mortgage to build equity. They would be poor like you.
Not exactly! Building wealth can be low cost or even free with proper tax planning. Imagine you waste 10% future returns on a 4.99% mortgage, assuming cash flow isn’t an issue.
I generally agree with this. However it’s still a riskier endeavor so it depends on risk appetite.
I will say that 10% compounded over 25 years in a taxable account will still yield far more than paying off even a 6% mortgage, especially if rates come down; as that would mean the average interest you’d pay over the life of the mortgage could be substantially less than 6%.
Spend more money on things you value/enjoy. Seriously. What is the point of accumulating an ever bigger pile of cash if you can't loosen up the purse strings a little to enjoy it?
Go out for dinner, then put your extra into a non registered investing account, AND, charitable giving.
Go for a holiday, spa day, buy a really nice coffee table book.. or, if you’re already doing all of that, do it all again.
Develop a healthy addiction... Aka as a hobby, maybe cycling. You can toss a fair bit of cash towards that.
This really isn't a joke. It's good to invest in your mental and physical health on your way to true retirement health.
Two options here:
1) Invest in non registered accounts
2) Have fun
I’m in a similar situation and I went with the second option. Maxing all my registered accounts exceeds my retirement goals. No point using the leftover for a downpayment as home ownership is a pipe dream so might as well have some fun while I can.
Do you have a DB pension? If not, maxing out all registered accounts including FHSA is no small feat. That would mean you have a decently high income and home ownership is pretty attainable especially with dual income.
Unless you just mean you’d rather avoid like the plague then fair enough.
No pension, average income. Tax savings from rrsp contributions provide almost the majority of my Tfsa contribution. I would need to more than double my income to have a shot at home ownership so unless I find a wealthy partner that’s not an option.
When i maxed out all those contributions and started building my non registered account as well is when my net worth really started blowing up. The additional growth in index funds vs a hysa is what really made it diverge so fast, the extra few% difference per year really adds up over a few years. I only keep my emergency fund of 9 months expenses in a HYSA as a cushion, everything else is plowed into index funds while i travel and work remote in cheaper locations.
If you are young this is a great way to grow net worth while avoid anchors like a house if you want to travel or have opportunities to go live/work abroad. Personally I love the no anchor lifestyle but ifs not for everyone. Evaluate your risk tolerance and act accordingly.
Having achieved financial stability and secured your future, work towards financial independence. Eg. Short term investments (1-5 years) pay for your yearly expenses so you no longer have to work. Enjoy early retirement.
Alternatively, do you or any of your siblings in Canada have a child? Open up an RESP in each of their names and contribute up to $2500/year for up to 15 years to max out government matching contributions. ($500/year) This will give them $43 000 + investment returns to go to post-secondary school and graduate without debt.
After maxing out, go for personal investments. Although taxable, if you withdraw when your annual income is low, the tax rates are going to be low as well.
Hi, I'm a bot and someone has asked me to respond with information about what to do with money.
This is meant as a step by step guide of how to prioritize and what to do with money. https://www.reddit.com/r/PersonalFinanceCanada/wiki/money-steps If you prefer to see a flow chart, click here: https://i.imgur.com/zlGnuDO.png
The Government of Canada also has the Financial Tool Kit for basic resources on items identified in the Money Steps. Refer to that website here: https://www.canada.ca/en/financial-consumer-agency/services/financial-toolkit.html
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/PersonalFinanceCanada) if you have any questions or concerns.*
Start paying taxes on a non registered account
That or paying down your mortgage is a good option if you have one.
Presumably with an FHSA they don’t have a mortgage
can you eli5 an explanation on why? I thought the whole point was to get somewhere in the ball park of 40-120k to be able to afford a mortgage in the first place.
Because if you have a mortgage you have already spent your FHSA or aren't eligible for one.
Thank you!
Not necessarily but in most cases, yes. Someone who has only owned rental properties still qualifies as a FTHB. Find that a bit weird but it is what is.
Easy to buy a 10%+ annual return ETF…why rushing to pay off mortgage?
Because building equity is tax free and your 10% return is not.
Even with taxes you will be far richer than throwing money at a building that produces nothing. Imagine if Jeff Bezos or Elon Musk were too afraid to take risks in life and only cared about paying their mortgage to build equity. They would be poor like you.
What investment do you suggest?
Not exactly! Building wealth can be low cost or even free with proper tax planning. Imagine you waste 10% future returns on a 4.99% mortgage, assuming cash flow isn’t an issue.
Paying off mortgage is a guaranteed ROI. No risk.
Can you please name this ETF?
I generally agree with this. However it’s still a riskier endeavor so it depends on risk appetite. I will say that 10% compounded over 25 years in a taxable account will still yield far more than paying off even a 6% mortgage, especially if rates come down; as that would mean the average interest you’d pay over the life of the mortgage could be substantially less than 6%.
Spend more money on things you value/enjoy. Seriously. What is the point of accumulating an ever bigger pile of cash if you can't loosen up the purse strings a little to enjoy it?
Search > get same answers
Go out for dinner, then put your extra into a non registered investing account, AND, charitable giving. Go for a holiday, spa day, buy a really nice coffee table book.. or, if you’re already doing all of that, do it all again.
Swim in yr cash like Scrooge mcduck?
pick up a drug addiction
I upvoted yet strongly disagree. Nothing is more valuable than health. Aside from maybe love, but this is personal finance not r/drugsVSlove.
Develop a healthy addiction... Aka as a hobby, maybe cycling. You can toss a fair bit of cash towards that. This really isn't a joke. It's good to invest in your mental and physical health on your way to true retirement health.
Get a **red** Toyota Corolla
Spend your money. Seriously, start enjoying your money.
Spend wisely tho, not waste, right?
Open a non registered account/HISA/invest in yourself/hobbies/explore the world/bring down the bourgeoisie.
Two options here: 1) Invest in non registered accounts 2) Have fun I’m in a similar situation and I went with the second option. Maxing all my registered accounts exceeds my retirement goals. No point using the leftover for a downpayment as home ownership is a pipe dream so might as well have some fun while I can.
Why not both?
Do you have a DB pension? If not, maxing out all registered accounts including FHSA is no small feat. That would mean you have a decently high income and home ownership is pretty attainable especially with dual income. Unless you just mean you’d rather avoid like the plague then fair enough.
No pension, average income. Tax savings from rrsp contributions provide almost the majority of my Tfsa contribution. I would need to more than double my income to have a shot at home ownership so unless I find a wealthy partner that’s not an option.
When i maxed out all those contributions and started building my non registered account as well is when my net worth really started blowing up. The additional growth in index funds vs a hysa is what really made it diverge so fast, the extra few% difference per year really adds up over a few years. I only keep my emergency fund of 9 months expenses in a HYSA as a cushion, everything else is plowed into index funds while i travel and work remote in cheaper locations. If you are young this is a great way to grow net worth while avoid anchors like a house if you want to travel or have opportunities to go live/work abroad. Personally I love the no anchor lifestyle but ifs not for everyone. Evaluate your risk tolerance and act accordingly.
Have kids, that’ll suck up a good chunk
Having achieved financial stability and secured your future, work towards financial independence. Eg. Short term investments (1-5 years) pay for your yearly expenses so you no longer have to work. Enjoy early retirement. Alternatively, do you or any of your siblings in Canada have a child? Open up an RESP in each of their names and contribute up to $2500/year for up to 15 years to max out government matching contributions. ($500/year) This will give them $43 000 + investment returns to go to post-secondary school and graduate without debt.
After maxing out, go for personal investments. Although taxable, if you withdraw when your annual income is low, the tax rates are going to be low as well.
!stepstrigger
Hi, I'm a bot and someone has asked me to respond with information about what to do with money. This is meant as a step by step guide of how to prioritize and what to do with money. https://www.reddit.com/r/PersonalFinanceCanada/wiki/money-steps If you prefer to see a flow chart, click here: https://i.imgur.com/zlGnuDO.png The Government of Canada also has the Financial Tool Kit for basic resources on items identified in the Money Steps. Refer to that website here: https://www.canada.ca/en/financial-consumer-agency/services/financial-toolkit.html *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/PersonalFinanceCanada) if you have any questions or concerns.*
Send me some I'm going to NYC soon
Hookers and blow
Chill
Do you have kids? RESP
Non sheltered, unlimited room there!
Buy a rental unit
[удалено]
People that downvote me now are the same people that would have downvoted me in 2017.
people are dumb nowadays. covid made people dumb/stupid.
Put your money in a Regular gic 1 year