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Today I'll share my leading financial investment concepts for the brand-new account in Canada – the FHSA (First Home Savings Account).
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i’ll probably go right between VEQT and VBAL with VGRO, 80% stocks, 20% bonds. but i agree that any of these can be good options depending on your time horizon & goals
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I completely agree with Brandon’s conservative approach to the FHSA – The ideal investment strategy for someone who is saving for a home and wants to achieve tax deductions. The tax benefits of this account will likely save people more than the actual gains from the FHSA portfolio.
My thoughts exactly.
If you choose some equities, it should be almost 0 growth companies/funds. This is money you NEED and not just regular investing.
Big agree. The tax benefits are guaranteed upfront. The short-term capital appreciation from stocks in our current recessionary environment? Sheer gamble.
I have no intention of using it for a down payment, I just want the 53% tax refund. Triple leverage for me 😅
@milhouse 7 The account has a shelf life, though. And there’s a penalty tax after if you don’t use it for a down payment. Additionally, this only works for first time buyers.
Do you know if there will be foreign withholding tax on US dividends or will they be waved like in an RRSP?
If the FHSA is also like the RRSP would it be more favourable to hold US ETFs vs CAD ETFs?
If I was to get a house later this year, is there a limit on when I can withdraw from fhsa to avail the benefits? I.e open an account and within a month or so use the funds to buy a house, will I still get those benefits?
In my situation (buying a home in <5 years) it’s probably a good idea to just do GICs. It won’t even beat inflation but at least you’ll have the principle a few years from now.
If you’re 18 and don’t expect to buy a home until like, 27 (I.e. > 5 years) then it might make sense to try something with more equity, maybe balanced or VGRO.
But markets can be unpredictable and can take years to recover, and I don’t want to delay buying a house during a buyers market because I’m waiting for my stocks to go back up, so therefore I treat the FHSA like I would retirement investments, be super conservative – I need the money in <5 years.
I’m split between two options.
the first option is If EQ bank offers a FHSA, open an account and ladder some GIC’s. The other option would be to open an account in wealthsimple and invest 75% in XBAL and 25% in CASH.
I totally agree. I’d started putting my “for the house” savings in TFSA GICs in Tangerine (currently at 5% p.a.), and I’ll gladly open FHSA GICs as well.
Nice, I will look into FHSA GICs as well.
Does that interest rate gonna be fixed or varying?
great video, one question, the money you withdraw will be tax free even if you use the money for something else other than a house?
No. Your options are use it for a house, convert it into RRSP at the end of term, or pay the taxes.
Thanks for the info Brandon, but your initial statement was not completely accurate. The account can be eligible for someone who already owns a home, but it just can’t be their principal residence. All 3 of my adult children have rental properties and would still be eligible for the FHSA since they haven’t lived in them within the past 4 years. I continue to appreciate your videos, and thanks for the continued awesome content!
Yup that’s technically correct! It was a broad statement and I could’ve been more specific 🙏🏻
I had actually commented a couple videos ago hoping you would do this video, so I am quite glad to see this. X/VBAL was one of the options I was considering (the other main idea was a canadian dividend etf, probably XEI), so this has helped decide to go with one of the BAL funds.
I’m considering this new account as an addition of 40k to rrsp contribution. I would invest 100% in VTI and transfert it to rrsp when maxed out. I would not buy a house with it as I think I will make more money by investing it long term… If I want to own a house I will use the 35k with HBP. I’m not sure yet…
Just had a question about the FHSA what if I buy a US security that pays dividend is there a withholding tax? or is it exempt like the RRSP? couldn’t find the answer online. Thanks Brandon!
Hi Brandon, does the money have to sit in the FHSA account for a fixed number of days/months before you can take it out for your first home purchase without any penalty?
1. Can I contribute to RRSP and FHSA at the same time? Or is it one or the other?
I have a limit of $6k this year. I assume I can only do 6k in RRSP OR FHSA?
2. I already have $ saved up in RRSP. Can I do the HBP AND FHSA at the same time when I am ready to buy a home?
3. Does questrade offer FHSA accounts?
I do have a financial planner, so plan A is to open it as low-conservative after it’s been open tell my financial planner about it and then move it so he can manage it under my segregated fund so it stays protected under the annoying assets rules of ODSP (Ontario disability support program)
I like that TFHSA you do not have to pay it back like the home buyer plan.
Once it’s open you should make a comparison video of RRSP – HBP (home buyer plan) vs TFSA (tax-free home savings account)
I read you can only use one type for your first home purchase TFHSA or HBP but I can’t remember if you can use the HBP for your second home.
Good and timely video. I am looking forward to seeing this new FSHA in action.
Great video! Totally agree with this approach. What article are you finding that saying it will be available April 3rd?
Hello Brandon! What would you do if 100% you didn’t want to purchase a home. Would you invest the same was as your rrsp/tsfa? Thanks!