Ask Samantha: Should I save for home ownership or retirement?

It’s a super grown up question, one most of us would probably rather not think about:  our financial futures.  Working to make a living can be hard enough, and saving what we can after bills are paid up is challenging as well.  So when it comes to what we should do with our hard earned savings, we wanted to get some expert insight to help with that tough decision.

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Meet Samantha Brookes.

Samantha Brookes is the CEO and Founder Mortgages of Canada, one of the fastest growing and most reliable mortgage brokerages in the country. Samantha will be releasing her first book entitled, “Cash is Queen: 11 Life-altering Wealth Principles for Entrepreneurs & Trailblazers” where she will share her insights and tips to help anyone understand the game-changing “cash is queen” philosophy that will help adjust your mindset, remove uncertainty, and learn the “how’s” of creating your success through adapting the 11 life-altering wealth principles Samantha has used in her own life.

With that level of expertise, we felt very confident asking Samantha: Should we save for home ownership or retirement?

 

Most individuals are at odds whether to save to buy a home or to save for retirement.  The answer is: your age should determine your priority.

 

It’s quite obvious the sooner you start saving for retirement the better off you will be in the long run and this is true. Depending on the investment vehicle you put your retirement savings into, your compound interest has the ability to snowball when the interest your account earns on your investment is re-invested and earns interest. The longer you are consistent with your contribution towards retirement and depending on the amount you are saving every month you could be a millionaire by the time you’re 65.

 

Let me give you a quick example: Let’s say you are 25 years old and you start contributing $300 per month for the next 40 years. Your account is earning 8% per year. At age 65 you’d have just over $1 million dollars.

Here’s where it gets interesting, let’s say you have been saving for retirement starting at age 25.  You get married, have a family and decide to buy a home. You have the ability to take money from your retirement funds to buy a home. Just remember there are pro’s and cons to withdrawing money out of your retirement funds before you actually retire. The biggest con is that you will be taxed heavily or penalized for taking money out early. Be sure to discuss the penalties, taxation and government programs with your financial advisor before taking your hard earned money to buy a home.

Buying a home is the “American” and “Canadian” dream! So let’s not discount that real estate is usually a great investment. Your return, when it comes to real estate will be based on the location, how long you hold the property and the economy. Adding real estate to an investment portfolio is a good idea, especially if you are able to buy more than one property. Just keep in mind, chances are you may not be able to keep up with your retirement contributions after you buy your first home.

At the end of the day, whether you decide to save for retirement or to buy a house, you will need a strategy and you will need to sit down with an advisor and you will need to do your research.  Then you will have to take the necessary steps to put your plan into action and be relentless.  Your outcome will be dependent upon your lifestyle and how committed you are to your financial goals. You could win now or win later, ultimately how you decide to prioritize is up to you!

Nadia Elkharadly

Nadia Elkharadly

Nadia Elkharadly is the Co-Founder and Managing Editor of Addicted Magazine. Her myriad of addictions include music, fashion, travel, technology, boxing and trying to make the world a better place. Nadia is also a feminist, an animal lover, and a neverending dreamer. Keep up with her on social media through @thenadiae.
Nadia Elkharadly

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