The newly launched tax-free First Home Savings Account (FHSA) is a great way to build up savings towards the cost of purchasing a first home. Whether for you, or to assist an adult child or grandchild on their journey to realizing on the dream of home ownership, the FHSA combines unique benefits with the some of the best advantages offered by RRSPs and TFSAs.
FHSA overview
Here is a quick overview of the new FHSA, how it works and how it can benefit eligible savers:
What’s the difference between the new FHSA and existing TFSA and RRSP?
If you want to know how the new FHSA compares to the new(ish) Tax-free Savings Account (TFSA) and/or the well-established first-time Homebuyers’ Plan within a Registered Retirement Savings Account (RRSP), check out our easy-to-follow breakdown here.
Investing in your future: Build your house on rock, not on sand
According to the federal government, the following investments are eligible to be held in an FHSA:
- Cash
- Savings deposits
- Stocks
- Options
- Government and Corporate bonds
- Exchange-Traded Funds (ETFs)
- Securities listed on a designated stock exchange
- Mutual Funds
- GICs
However, it is important to note that, if your investment time horizon is less than at least three years, it is generally recommended not to invest in assets that may be subject to market volatility and/or which do not guarantee your principal. While longer-term investments can help build wealth over time, a focus on preserving wealth for shorter-term time horizons is strongly recommended. This would include such products as GICs, savings deposits and money-market funds, to name a few.
Whether you’re saving for your first home – or helping your family members save for their first home – we can help. Talk to us today about opening your FHSA.
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