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Old 11-03-2019, 10:08 AM   #1
shane_c
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Default House equity after selling

If someone sells their house, and plans to rent for a year or so, after paying off a few bills (to eliminate some monthly expenses) what is the best thing to do with the rest of the equity so that it can collect good interest, help at tax time and be able to be used as a house downpayment in the future (without facing tax penalties or losing a lot of it to admin fees when it's withdrawn).
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Old 11-03-2019, 05:04 PM   #2
Slava
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While I can't give you pure advice here, there are a few main considerations. Firstly, if you can put this into a TFSA or between a couple TFSAs, that's the ideal location. You can withdraw without tax implications and it's sheltered while it's there regardless of the type of income it earns.

If the TFSA is not an option, or not an option for all of it, you have one option for tax advantaged investment. This is a series of mutual fund that is more expensive than stocks or ETFs, but you will not receive any taxable distributions. You can invest there in lower risk holdings as well, so tax-wise this is a significant advantage.

In terms of fees, you absolutely shouldn't be locked in to anything, and wherever you're investing, that should be a deal breaker.

Risk-wise it's maybe not as exciting as you might hope. If you're looking at a year or less and want certain that this money is there in a year, you really can't take much risk. While things look ok in the market these days, no one can tell you without question that you will be ahead in medium or higher risk things in the next year. So you've got a constraint there. That might not feel good if things rally for the next year, but if things go off the rails it's going to save you some heartache for that next property! This is a decision you'd best talk through with someone with more specifics though.

I hope this helps and feel free to PM me or email me for more detailed information.
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