What to do with down payment?

[harbie]

So say you have a partial down payment what is the best place to put it until you're ready to use it?

I'm asking because dh and I are looking at moving but most likely will rent (if we can find something reasonable) until we find out what his job situation is going to be like(may possibly relocate) and fingers crossed the market corrects itself in the meantime. So is a simple savings account good enough or what? I'm good at deals with coupons but rather clueless when it comes to financial stuff. I want flexibility in withdrawals since we may take it out within a year or maybe not. It is a larger amount than I'm used to dealing with in my simple chequing/savings account (20K) so any advice is welcome.

[beckie.c]

If it was me, I would look at options like a low-risk TFSA, or if you are first time home buyers, there is also the Home Buyers Plan with RRSP's however that would leave you with less accessible $$.

I'm currently holding our growing Emergency fund in a fairly low risk TFSA with Mutual Funds. It pays a distribution monthly and about a 5-8% return in the last year. On approx $6,000.00 my Distribution is around $26/month and I can pull $$ out at any time. But once I pull them out, I can't replace them until the next year. (I also contribute $200-$300 each month, so its always fluctuating.) I went through a Sunlife financial planner, who happens to be a family friend when I did this. Definitely has been a better return than the banks are offering at the moment.

[MortgageQueen]

I agree. A TFSA is a good place. You know best what your risk tolerance is.

[super807]

Many different types of accounts are available as TFSAs, including regular savings, GICs, mutual funds, etc. Some types you can withdraw at any time, other types, like GICs have a maturity date and money is inaccessible until that time. Although interest rates are low right now, the advantage of a TFSA is that whatever growth you have will be tax-free.

Last year we put money we had ear-marked for renovations in a TFSA savings account, as we expected to use the monty within about three or four months. Things didn't go as planned as we had a flood in the basement, and I was not taking on bathroom renovations until the basement was dealt with (was covered by insurance). So the money is still sitting there, hopefully to be used this summer, but we haven't lost anything because of it. We also have GICs and mutual funds in our TFSA, as the money is ear-marked for different purposes.

[Lynn49]

Why would you not just go to your bank and talk with a financial advisor for free? They take clients with any (to no ) money to invest.....

[Dan in Canada]

Have you considered a high interest savings account through your TFSA (ie. Tangerine)?

[harbie]

Why would you not just go to your bank and talk with a financial advisor for free? They take clients with any (to no ) money to invest.....

We are currently just keeping in our savings account because we might be using it for a down payment on a great place we both like but we might just decide to hold off a bit so it's a new found issue that has come up recently.

MortageQueen, I have a low to zero risk tolerance

[neelkamalll1979]

We kept our down payment in a savings account that had a high interest promo for 3 months. After the promo was up we put the money in a 1 year flexible GIC. The GIC matured so we transferred it to a savings account. Now the money is gone since we just bought a house!

[harbie]

Thanks neelkamalll1979 for your help. Congrats on your house

[brunt]

Normally a high interest savings account is not the best place to park your cash, BUT if you are going to need access to the money at a relatively near point in time, then it is probably the best way to go.

Sure, you may give up some gains, but the important thing is that all the money that you put there is going to be available when you need it.

There is money with which you can speculate, and money with which you cannot. A down payment on a house is firmly in the "cannot" camp in my opinion.