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I'm trying to save for a house down payment in 3 to 5 years. Where would you put the saved money? I plan to save about 100k to 150k.

- "high" interest savings account?
- T-bills?
- bonds?
- dividend stocks?
- other?

(Unfortunately?) my TFSA and RRSP are already maxed out... so this will probably be in a taxable account.
 

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I'm trying to save for a house down payment in 3 to 5 years. Where would you put the saved money? I plan to save about 100k to 150k.

- "high" interest savings account?
- T-bills?
- bonds?
- dividend stocks?
- other?

(Unfortunately?) my TFSA and RRSP are already maxed out... so this will probably be in a taxable account.
I would go with a savings account and I'd periodically buy GICs with a maturity matching the date when you need the money.
 

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just a quick question, but why just a savings account? aren't there other vehicles out there that will earn you a better return while you wait...? what about a conservative mutual fund or t-bills...? why are those not good?

i'm curious cause i also have short term savings goals...
 

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It depends a lot on your risk tolerance. With 3-5 years, you've got maybe just enough time to play with bonds and stocks, but it's quite risky to do so without much time.

Personally, I did it when saving for my car -- kept the money in the market until the week before I was ready to buy. It worked out fairly well for me, but if it didn't then I still had the option of buying a less expensive car. i.e., there was still some risk tolerance there, despite the timeline. Is that the case for you?

Do you have that money now, or is it savings you will accumulate over the course of the next few years? That's also a factor, since money you don't save until 2 years from now doesn't have much time to be in anything but a GIC/HISA...
 

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You don't mention where you live. A real estate investment is risky right now in many cities. You might want to consider a REIT so that your equity tracks the market.

5 Years is different than 3 years. In 5 years you could consider a convertible debenture because they are redeemable in that timeframe, especially if the market goes up by 25%.

For 3 years, savings accounts are the safe choice.
 

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Discussion Starter #6
@kcown: I'm looking for a condo in the city of toronto. Do you know which REIT's track the residential condo market? I think most of them are commercial real estate, no?

@Potato: I have about half the down payment now.

I don't have particular reasons for choosing to buy in 3-5 years. I have "a feeling" that home prices will stagnate for the next few years, and want to build up a larger down payment because I hate paying for compound interest.
 

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I'm looking for a condo in the city of toronto.
Chances are that in 2-3 year you might be able to buy a small Toronto condo (1 bedroom) in a very decent location for as little as $150K. The real estate bubble is bursting and the condos are the first to go. 50% haircut for the average Toronto condo doesn't seem unreasonable to me.
 

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@kcown: I'm looking for a condo in the city of toronto. Do you know which REIT's track the residential condo market? I think most of them are commercial real estate, no?
Yes they are. But commonly thought to track residential by 2-3 years in boom and bust cycles.
 

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just a quick question, but why just a savings account? aren't there other vehicles out there that will earn you a better return while you wait...? what about a conservative mutual fund or t-bills...? why are those not good?
Not really... savings accts actually beat most short term "guaranteed" investments right now. The catch being that savings acct interest is subject to change without notice

I would probably get some stable dividend stocks and set a stop loss, but that isn't necessarily a recommendation. Depends if you are familiar with stocks and how much you'll pay per trade
 
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