When you start saving small amounts with each pay, it may be difficult to imagine that you will have collected enough one day to carry out your project. However, this is what Marijane Moreau Peterson, 30, has achieved. Since graduating in 2016, she has accumulated a down payment in a tax-free savings account (TFSA) that she will use to buy a house in the suburbs of Montreal with her spouse.
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“We have been looking intensively for a year for a two-storey house with four bedrooms, two of which will be converted into offices for teleworking, she specifies. We made several purchase offers and they were never accepted with the market which is very aggressive. However, we are well positioned because we each earn a good salary and we have a down payment of 20% of the value of the house. »
Marijane has been saving for a down payment since 2016, when she started working in human resources. She had then decided to invest in two TFSAs $50 a month for her retirement and $50 for a down payment for a property. “The plan to buy a house was not at all concrete at that time, but I told myself that if I decided to stay a tenant, this money could be used for other projects”, specifies- she.
PHOTO HUGO-SÉBASTIEN AUBERT, LA PRESSE ARCHIVES
Simon Préfontaine, financial planner at Lafond Financial Services
For Simon Préfontaine, financial planner at Lafond Services Financiers, opening a TFSA per project is an interesting strategy: “Thus, each account can have a different investor profile because the investment horizon is not the same. »
He is also happy to see that even if Marijane had the medium-term plan to buy a residence, she also invested in the longer term for retirement. “We shouldn’t overlook the value of compound interest over the long term,” he says. For someone who is starting to save for retirement at a young age, this will make all the difference. Raising an interesting sum will be done with much less effort than if it had started late. »
Make a habit of saving
In addition to the amounts withdrawn automatically each month, Marijane invested more in her TFSAs as soon as she had bonuses or a little money accumulating in her current account. How does she manage to have this discipline? It’s very much a matter of education.
When she turned 18, Marijane Moreau Peterson had a gift from her father: he told her that he would pay for her studies, but in return, she would have to set aside half of her wages from her job. ‘student. So, while learning to save, she would understand the impact of income tax. Results ? When she left for an apartment, she was able to dip into her savings to furnish herself. “I never had any debts,” she says.
As this habit of saving is well anchored, she significantly increased the amounts withdrawn each month as her salary increased.
I changed jobs and my income increased significantly in 2019, then again in December, so I ended up putting $200 each month in each TFSA.
Marijane Moreau Peterson
Why the TFSA rather than the RRSP?
Many may wonder why she opted for the TFSA rather than the Registered Retirement Savings Plan (RRSP) that she could have used for the Home Buyers’ Plan (HBP). It’s because Marijane started saving when she was still a student with a very low salary that didn’t make her pay taxes. She therefore had no advantage in using her RRSP contributions to reduce her taxable income. “Then, she changed jobs a few times in the last few years, which allowed her to see her salary almost double, so it’s good that she kept her RRSP contributions, which she will now have the advantage of using,” observes Simon Préfontaine.
It is, moreover, done. “I started investing in my RRSP last year with my employer who also contributes,” says Marijane. I contribute enough to collect the maximum of what my employer can give me. »