What would you do with 650k?

[sasha520]

About to sell our primary residence and come out of the transaction with approx. 650k. No plans in the next year or 2 to buy anything *living with family*.

What would you do with that much money? Feels stupid to hold on to cash, but wealthsimple offers 5% on its cash accounts and they are insured up to 300k if something catastrophic happens.

We are thinking to max out our TFSAs (they're a mix of 90% equity, 10% gold/bonds)  and maybe our kids' RESPs? But then what to do?

Any advice? That money will eventually be used for the purchase of a home, so we don't want to be too risky with it - but we don't want it being eaten away due to inflation either.

*we have no debts
*we are hoping to earn as much as we can on this money and use if for our next primary residence purchase (which will be with my parents who remain in the market, or in a much cheaper province)

THANK YOU!

[bacchi]

We'll probably be in a similar situation next year when we sell. I'm circling around putting the majority of it in a 5% MM (if available) and some ($100k?) in an income fund like Vanguard Wellesley. We do have a backstop of taking out a smallish loan from SO's parents; if the market drops, we can take the loan until the market recovers. I'd love to hear others' thoughts on how to handle it.

[Ann]

If I were holding on to it short-term, and planning on using it in the next year or two to purchase another home, *I* would put most of it into small chunk CDs.  I guess max out tax-deferred accounts first.  I would probably consult someone to estimate how this would affect my taxes for 2024 so I would be prepared for that tax bill.

If you have any debt, I would use it to pay it off.

What are your goals for this money?

[JLee]

Personally, I'd invest it according to my asset allocation.  I am debating a significant construction project so I might reserve 100k of it in a HYSA.  I suppose that isn't helpful though so in your case I'd find the highest yield CD or HYSA I could and park it there.

[G-String]

I'd put it in a GIC. 

[Fomerly known as something]

For a 2 year timeframe I’d go with something like US treasuries with the money I want to make sure I had for the downpayment.  If I’d feel I wouldn’t need all of the $650k. I toss whatever that don’t need into something VTSAX like.

[okits]

Here's an answer from another Canadian.

If you want unlimited access to the money, the current 5% from WealthSimple is pretty good.  The rate paid may change, going forward, but it's 5% now, when inflation is around 3%.

If you can lock the money in for a year, you could secure a similar rate for that term with a GIC.

With more information (your overall financial picture, how much you want available for a future home, how much you plan to spend on the next home, other goals) you may get more nuanced advice.

[SweatingInAR]

My recommendation depends on your current financial status.

1. If you are still accumulating wealth in preparation for retirement and will have no trouble qualifying for a mortgage, retain only enough for a house downpayment in a guaranteed interest-bearing account like the aforementioned 5% accounts. Invest the rest according to your investment policy. That big of a chunk invested is enough for some people's Lean FIRE!
2. If you are already retired or plan to soon, you might have trouble qualifying for a home loan when you expect to be buying next so keep a bigger chunk in a guaranteed interest-bearing account.

[SunnyDays]

If you decide to put it into GICs, my credit union (Canadian) offers 5.3% for either a 12 or 24 month term for deposits of 250K or more, plus you get a bonus each year on your interest.  There is no limit on deposit insurance.  I'll PM you the specific one.

[Retire-Canada]

About to sell our primary residence and come out of the transaction with approx. 650k. No plans in the next year or 2 to buy anything *living with family*.

If you gave me $650K I would invest it in my Non-Registered accounts because I have no registered account space. But in your case maxing out any registered accounts makes sense and the dump what's left into your NR account. Personally I would invest it into the stock market. That has the best chance for growth and since it's a large amount the differential can be very significant. The downside is the market could crash when you want to buy a house. Now in many cases you won't be any worse off since the growth pre-crash will just be cancelled out by the crash so you can likely get the money out fine. I'd take that chance and if I didn't want to take the money out during a crash I'd just wait to buy. I would also say once you have decided to buy a house move the funds you want to use for the down payment into a safe investment like a GIC or HISA.

If you think it's likely you'll want to buy in a year and you don't have the flexibility to put that off due to external factors than skip the stock market and just do GICs/HISAs.