B.C. Couple Plans to Use GICs to Buy Bigger Home

A married couple from British Columbia, both 45 years old, want to buy a bigger house.

They have a home worth $1.2 million with no mortgage. They also have $400,000 in GICs (Guaranteed Investment Certificates). Now, they are thinking about using this money to help buy a new home with a rental unit.

The couple, Alex and Alina, want to know if using their GICs is a good idea.

They Also Want to Grow Their Savings

Alex and Alina both work and earn $195,000 a year together.

Alex will get a pension when he turns 62. It will pay him $5,500 every month. Alina does not have a pension, but she plans to work until she is 65.

They also own a rental house worth $1.4 million. It brings in $5,500 every month in rent. They still pay a mortgage of $3,200 a month on that home.

They have also saved money in RRSPs, TFSAs, and an RESP for their child’s education. But they feel their money could be working harder.

Expert Says Using GICs Is a Smart Move

A money expert, Graeme Egan, says it is okay to use GICs to buy the bigger home.

The rental unit in the new house will help pay the mortgage, if they need one. The rent from their other property gives them a safety net too.

He also says they should stop using mutual funds and start using ETFs (exchange-traded funds) to grow their money. ETFs cost less and can make more money over time.

Focus on Growth, Not Income

Since Alex and Alina are still working, they do not need to worry about dividend income right now.

Instead, they should try to grow their money for the future. The expert says they should put 70% of their money in stocks and 30% in bonds for now.

As they get older, they can move more money into safer investments.

How to Build a Strong Investment Plan

Here’s what the expert suggests:

Use ETFs for low fees and better returns

Put 100% stocks in TFSAs to grow money tax-free

Use bond ETFs in RRSPs

Keep putting money in the RESP for their child

Save in RRSPs, then use tax refunds to add more to TFSAs

Think about hiring a fee-based financial planner later to plan for retirement

Selling the GICs to buy a new home makes sense for this couple.

They are on the right track with real estate and savings. But they need to invest smarter to grow their money faster.

A bigger house with a rental suite can also help with monthly costs. With the right plan, Alex and Alina can reach their retirement goals and take care of their child’s future too.