$20,000 Rrsp

[gizmo8]

My closing date for my condo will be 2009...I'm a first time buyer so Im going to use my RRSP to purchase it,but in the mean time Im going to use the 20K and invest it into a safe and secure investment like bonds or T bills..any other suggestions?..or a different direction?...thanks

[hoob]

My closing date for my condo will be 2009...I'm a first time buyer so Im going to use my RRSP to purchase it,but in the mean time Im going to use the 20K and invest it into a safe and secure investment like bonds or T bills..any other suggestions?..or a different direction?...thanks

If you have decided that you are going to use this HBP method of tapping RRSPs, then what you should do is take $18000 and place it in a separate RRSP account, into very stable investments with 3-5% returns. The RRSP advisory with whom you open the account will be familiar with the best options for your stated goals.

ie You want it to be as close to $20G as possible when you need to make the withdrawal, and you want it at a separate account so your "investor profile" for the rest of your RRSPs (held at other accounts/institutions) isn't tarnished by the short-term requirements of these specific funds.

If you're pretty sure you know which bank you'll be getting the mortgage with, ultimately, you probably want to park the RRSP funds in an account at that same bank... It will make the transfer easier and quicker in the end. In my transaction I had to tap my ULOC to bridge $20,000 for the down payment since the HBP transfer took longer than expected.

Depending on your marginal rate and liquidity requirements, I would also split the lump RRSP contribution (or at least the tax claims) into three tax years so you can get the best tax deferrel benefit as possible. TY2007/2008 returns rolled into your other downpayment savings, and TY2009 return used for closing costs or furniture or whatever after you've moved in. This is of course presuming you currently have the money outside of RRSP, and will not be tapping existings retirement investments.

[notanexpert]

... what you should do is take $18000 and place it in a separate RRSP account,....
... and you want it at a separate account so your "investor profile" for the rest of your RRSPs (held at other accounts/institutions) isn't tarnished by the short-term requirements of these specific funds.


Why do all that? how can the investor profile be "tarnished" be keeping 20k in short term investments????
I don't get it. I have not done that and I had no problems, so why would anyone do that?

[Capt.]

If you go the mutual fund route, you'll probably want to choose a "no-load" fund that lets you withdraw your money without any fees. If not, you could lose 5-7% of your investment once you pull out after only a couple years.

[hoob]

Why do all that? how can the investor profile be "tarnished" be keeping 20k in short term investments????
I don't get it. I have not done that and I had no problems, so why would anyone do that?

In my experience, the two institutions I dealt with in 2003-2004 had no ability to cope wit the scenario "aggressive risk portfolio, but X amount must be guaranteed and withdrawn in X months" and I wasn't able to obtain any investor profile that would let me manage the funds I wanted for both aspects without getting nannied or having transactions flat out refused (since the transactions I was trying to request did not fit the "profile".)

It was just less hassle to open a new, separate account for my HBP funds. My circumstances/account might not be the norm through... :shrug: