Finding the right investments for a FHSA can be tricky
BNN Bloomberg
Two of Canada’s major banks are reporting strong demand for the just-launched First Home Savings Account (FHSA) from young Canadians saving for a down payment, but the real challenge is how to invest for a potentially short and shifting time horizon.
It’s no surprise considering the FHSA has the combined tax perks of a Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA), but the real challenge is how to invest for a potentially short and shifting time horizon.
Like an RRSP and TFSA, contributions in a FHSA can be invested in just about anything. Investments in a FHSA, however, must be ready to liquidate quickly when that magic day comes and the account holder makes an offer on a home. That could come any time between immediately to a maximum of 15 year (when it can be transferred to an RRSP).
Fixed maturities on bonds and guaranteed investment certificates (GICs), or equities in the depths of a market lull, could pose a problem.