I received an email from Michelle the other day about the best way to grow her down payment savings for a house in 2 years time.  Here is the email:

 My husband and I will buy a house in about 2 years. We have no credit card debt or loans and usually we can put away between $500-$800 per month. We are trying to save as much as possible for a down payment. We have RRSP's but you can only use $20,000 towards a house. We will do that at the time. In the mean time we have an account that gives us about 3% interest on the money we are saving monthly. Currently there is $42000.00 there. How can we make this money grow faster in the next 2 years without locking it in?  Thanks for any suggestions.

To begin, I would like to say congrats for staying out of debt and putting away money every month.  That in itself, is a huge financial achievement.

So, the key question is, how to grow the down payment money as fast as possible without locking it in?  With the 2 year time line that you have, I think that investing in the stock market is out of the question.  I think that your best bet would be maximize your RRSP (for both of you), and put the rest in a PC Financial Savings account that pays 4% annual interest.

Also note that with the RRSP Home Buyers Plan, you can contribute $20,000 from EACH of your accounts.  So you can potentially use $40,000 from your RRSP's providing both of you qualify.  As for which investment vehicles to use inside the RRSP, if you're not willing to lock in your money, then a money market fund is among the few choices available.

Note that I'm not a financial advisor, so please take my advice at your own risk.  Note my disclaimer at the bottom of the page.

Subscribe
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

17 Comments
Oldest
Newest
Inline Feedbacks
View all comments