Q

What’s the best way to save for a down payment on an apartment or house?

A

We'll tell you, but it might depend on when you plan on buying.

Planning to join the ranks of homeowners? There’s no emotional wellbeing that can compare with what one feels when acquiring an irregularly sized collection of sheetrock, glass, and linoleum. But exactly when are you planning to buy? If you’re not going to buy for five or more years, you’ll want to get your savings invested. Investments in equities, aka stocks, though susceptible to wild up and down swings, have been shown to increase in value quicker than real estate, so it’s likely that the longer you keep money invested in the market, the more house you’ll be able to afford when you do pull the trigger.

The closer you get to the date you plan to buy, the more conservative your investments should become, trading out equities for low-risk government bonds, which are more stable, while offering less potential for growth. If you plan to buy tomorrow, next year, or really, anytime within the next three years, you’re going to want to park that down payment savings somewhere 100% risk-free that allows you to withdraw it at any time. For this, consider Wealthsimple Smart Savings, which is similar to a bank savings account– only way better. Like a bank account, the CDIC insures your deposit up to $100,000. Unlike a bank account, Wealthsimple Smart Savings offers real interest—currently 1.7% net interest. There is no account minimum, no transaction charges, and no hidden service or management fees. Plus, any amount you put in Wealthsimple Smart Savings will count towards the $100,000 account balance required to achieve Wealthsimple Black status, which offers reduced management fees on investment accounts as well as cushy perks like complimentary entry for you and your future spouse into 1,000 airport lounges worldwide.

So, if you’re planning to buy in more than three years, start here.

If you’ll be ready to buy a place sooner than that, starting here is your best bet.

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