The FHSA is your first-home account. The CHALLENGE: balance growth (so it's worth more at purchase) with safety (so you don't lose it during a market crash). The solution: match your investment risk to your home-buying timeline.
See 4 timeline strategies →Buying within 24 months? Keep it in cash at 3-4%. Stock risk too high for short timeline.
Lock 4.5-4.65% across 3 maturities. Predictable returns, no market risk.
Moderate growth with cash cushion. Best for 3-5 year horizons.
Aggressive growth for buyers 5+ years away. 70% equity = higher expected return.
Buying in 1 year? Cash. 3 years? Conservative balanced. 5+ years? Growth. The shorter the horizon, the lower the risk should be.
FHSA contributions are deductible (like RRSP). $8,000 contribution + 33% marginal rate = $2,640 tax refund. Reinvest the refund.
Stock markets can drop 20-30% in a year. If you need the money soon, that's a $20,000 loss on $80k. Cash/GICs only.
Max FHSA ($40k) + Max HBP ($60k) = $100k tax-advantaged down payment per person. $200k for a couple. Use FHSA first (permanent tax-free withdrawal).
FHSA carries forward $8k of room per year (max $16k total in one year). Open it to start the clock, contribute when you can.
Decided not to buy? Transfer the FHSA balance to your RRSP tax-free. Does NOT use RRSP room. Best escape hatch in Canadian tax planning.