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Posted on: 07-03-12 13:01:54
Quote:
Originally posted by rahul_singh23
There are few basic thoughts:
1. Maximize your RRSP in good funds and you can use same RRSP for down payment later
2. Maximize your TFSA in good capital gain return and no tax.
3. RESP is good idea too for some
4. Other investments/funds/etf/stocks are more like a personal approach and may needs professional advice.
5. If you do not own then rent something which makes more sense and cheaper than owning otherwise you are paying too much
Perfect! makes sense. the only problem is about good funds...if the RE market corrects, dont you think funds value will also go down by similar percentage?
RRSP: Since last 5 years I have not seen any growth in any portfolio..only except for upfront tax benefit I do not see much benefit. Instead the loan for house that I took 5 years back gave me 300% return...ok at least 150%.. on downpayment of 50K, the property value now appreciated by 200K. If it corrects, it will be 100K but still 100% return on original investment.
TFSA...I have been putting money only to see that my 1% money market making good returns.
Basically you are recommending stock/mutual funds investment in this shaky market. Recent highs in the market, dont you think some thing is fishy about it as well? All the factors still looming like war, europe, high commodity prices, slowing china etc.
What do you project as a good sector..diversification will make you secure but then it will not appreciate only.
RESP ..with the complications and rules it has become a joke..they should rather give the tax breaks on savings than coming up with 20% contribution.
Again, for how long do you recommend this? what will be the best time to get into buying a house? 20% correction in RE market? 50% correction? What if that does not happen or happens after 50% rise in property values?
Lets say you have around $100K and you are renting approx $1500 per month). what would you do?
So if you keep the money in mutual funds for a year with a rate of return of 10% (gud luck finding that)
You will be earning 110K at the end of the year, then you will pay around $1500 in tax. so it will really be around $108K. By that time you would have already paid $18000 in rent. basically loss of $10K just because you are renting.
If you are waiting on sidelines to buy your first home, you will never be able to take the decision if the market is going up or down. you will always feel that it will correct more..and then you will miss out on it. At the same time you will keep paying rent for an old property/condo.
ok you want to be cautious, if you have $100K as 20% downpayment, buy a house where 20% downpayment is of approx $75k i.e around $400K. This will not only better house than the one you are currently renting but if market goes up/down you can take the decision to upsize/downsixe accordingly.
Quote:
Originally posted by metallurgy
Exactly, you pinpointed the dilemma from which I am going through now and some of my friends also. We have the down payment (20-25%) and have reasonably good household income. But we are confused? What to do?
Man you are a dream bakra of 1) Financial advisor, 2) RE Agent 3) Mortgage broker, 4) Banker, etc.
Give the money to me, I will buy the property with that and will give it to you on rent..that way you will know that youe money stays in your own house only
Honestly, if you feel you have stable income, topped your other required savings and if this is your first home, I would highly recommend buying a property now..don't get bogged down with correction. You will be living in your own house and money that you will be putting will be for your house and will not go down the drain in rents. In fact go for little bigger house because there are savings for first time buyers which are not there when you move to different house later on. You also have good interst rate that will be guaranteed for 5 years..so if market corrects in 5 years, at least your payment will not be impacted. and if it does not you already will be reaping the benefits of appreciation.
Oh and if you decide to buy, condo is big no no..come 2014 there will be condos all over the place and no buyers..big risk to condo..rather go for a townhouse if not semi or detached. We have a very good example of active user on this forum who lost on condo even during the peak RE market.
I still don't understand if house is such a good investment (consider it as your first house), why everybody is not buying it. At least those people who are renting more than one bedroom apt will always benefit from buying a house. What is hidden which I am unable to watch.
Mr bhootnath is good in math and can definitely make it more clear.
Looks like owning a house is like winning a lottery, so everybody should try it when interest rates are so low and no min. down payment is required.
Quote:
Originally posted by web2000
I still don't understand if house is such a good investment (consider it as your first house), why everybody is not buying it. At least those people who are renting more than one bedroom apt will always benefit from buying a house. What is hidden which I am unable to watch.
Mr bhootnath is good in math and can definitely make it more clear.
Looks like owning a house is like winning a lottery, so everybody should try it when interest rates are so low and no min. down payment is required.
Nope, not until you tell me, since how long have you been waiting on sidelines to buy a house.
Quote:
Originally posted by bhootnath
Quote:
Originally posted by web2000
I still don't understand if house is such a good investment (consider it as your first house), why everybody is not buying it. At least those people who are renting more than one bedroom apt will always benefit from buying a house. What is hidden which I am unable to watch.
Mr bhootnath is good in math and can definitely make it more clear.
Looks like owning a house is like winning a lottery, so everybody should try it when interest rates are so low and no min. down payment is required.
Nope, not until you tell me, since how long have you been waiting on sidelines to buy a house.
I still want to learn why everybody is not buying a house when it is being said that paying $1500 per month as rent is putting money into the drains. What is the single most reason people like to put money into drains???
Before 5 years I was thinking buying home is not in benefit in compare to renting apartment. There are lot of other expenses with the house and it is not worth but I was wrong. Now, I own the home and my thinking has changed.
As per my understanding, there should be only two requirement for buying first home in compare of renting apartment.
Ask yourself
1) Would you stay in same house at least 4 or 5 years?
2) Do you have backup plan to survive in house if you would loose your high pay job?
If your answer is yes for both questions, go ahead and plan for buying the home in your budget. Your budget should be calculated on base of your current bank balance, montly income and monthly expenses after owning house (include mortgage + property tax + utility bills + maintanance....) .
Thanks,
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Quote:
Originally posted by web2000
Quote:
Originally posted by bhootnath
Quote:
Originally posted by web2000
I still don't understand if house is such a good investment (consider it as your first house), why everybody is not buying it. At least those people who are renting more than one bedroom apt will always benefit from buying a house. What is hidden which I am unable to watch.
Mr bhootnath is good in math and can definitely make it more clear.
Looks like owning a house is like winning a lottery, so everybody should try it when interest rates are so low and no min. down payment is required.
Nope, not until you tell me, since how long have you been waiting on sidelines to buy a house.
I still want to learn why everybody is not buying a house when it is being said that paying $1500 per month as rent is putting money into the drains. What is the single most reason people like to put money into drains???
I can answer that but first you need to tell me how long have you been waiting for market to correct so that you can buy a house and how long are you planning to wait for?
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