# RRSP can't be in long term investment if using for first home owner program?



## emperor (Jul 24, 2011)

My bank said my RRSP has to be in a daily roll over account if I want to use it for the first home owners program. They said if I lock it in to a GIC for example I can no longer take it out to purchase a home.

It didn't use to be this way at my bank and I was wonder if everyone has the same problem? I'm making nothing off my25K and I'm still sitting on the fence about a house.


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## peterk (May 16, 2010)

Only in the sense that you would have to wait for your GIC to mature before withdrawing it without penalty.
Whether you SHOULD invest if you're going to buy a house in a year is another matter.

I hate how banks prey on people in this way as soon as they get the feeling their client isn't going to know any better.


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## domelight (Oct 12, 2012)

emperor said:


> My bank said my RRSP has to be in a daily roll over account if I want to use it for the first home owners program. They said if I lock it in to a GIC for example I can no longer take it out to purchase a home.
> 
> It didn't use to be this way at my bank and I was wonder if everyone has the same problem? I'm making nothing off my25K and I'm still sitting on the fence about a house.


 Banks rarely volunteer information that is not beneficial to them. Here are 2 basic choices they are not telling you.

1) Buy 30 day GIC's (obviously the interest rate is low)

2) Lock in your GIC with an option to cash it out early. (better rate than monthly GIC's) Generally you will lose ALL interest earned if you exercise the cashout option. However it may suffice while you make up your mind about the home buyer program.


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## emperor (Jul 24, 2011)

Thank you for the information.


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## MrMatt (Dec 21, 2011)

If you expect to be withdrawing shortly for the HBP, you should have it in an appropriately secure and liquid investment.

Can you imagine how many people would want to use the HBP, then buy GICs in their RRSP, and they'll blame the bank for their mistake.

I'm not sure you'd even get a higher rate from GICs compared to a simple high interest account.


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## cardhu (May 26, 2009)

A HBP withdrawal is a cash withdrawal, so whatever you hold in your RRSP must be readily convertible to cash if and when you choose to pull the trigger on the HBP withdrawal. It does not need to be held in cash between now and when you take the withdrawal. 

There are many things that are readily convertible to cash, but the low-risk sort that ensures preservation of capital will also come with low-reward. If your RRSP is a self-directed one, there are several “cash-equivalents” available, notably a variety of HISAs (“high” interest savings accounts) that are presently paying about 1.2%. There are also cashable GICs in which you lose NONE of the interest accrued when you bail out.


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## Mall Guy (Sep 14, 2011)

This is likely a "know your client" issue. Somewhere along the line, you likely filled out forms about your level of investment knowledge and risk tolerance. Banks are paranoid about over stepping these guidelines (some have had to pay hefty settlement because of them). But the biggest surprise to me is that they didn't try to sell you high MER money market mutual funds !


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