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I am conflicted as to what I should do about this large sum of money that I have now. Opinions are welcome!

As you all know, I won the lottery.

No, not really, I wish I did (or I wish I was that lucky but I’m not).  I did walk away from the real estate “game” (if you can call it that) with a bit of money.  I suppose the folks at Greaterfool.ca are probably all pissed off right now and are writing another rant post about me going into real estate and being completely irresponsible as we speak.  I’m sure someone else is probably looking back at the archives and calculating exactly how much I made after all the fees, the mortgage payments (not principle, of course), and other carrying costs that I had to pay for during my time holding real estate.

Although a part of me is completely relieved that I don’t have a ticking time bomb (a large mortgage) on my hands right now, another part of me is interested in delving back into the real estate game (with smaller fish to fry of course) because prices are low right now.

As a very practical person, I am conflicted as to what I should do about this large sum of money that I have now.  So in true neurotic, youngandthrifty fashion, I will go through the possible options, and I welcome other options too!

Buy Real Estate Again Option A

One of my ideas (sometimes I think I have Bipolar disorder a la Silver Linings Playbook because once I start thinking about something I can’t stop thinking about it and end up wasting hours of my time researching and thinking)… was to perhaps get two condos.  Yes, I realize your eyebrows are raised and you are probably thinking ARE YOU CRAZY? But hear me out:

One in downtown that I can rent out (perhaps furnish it for short term rentals) and one to live in.  This is probably the most risky option because:

a) condos rarely appreciate and mostly just depreciate because they get old and the maintenance fees just go nowhere but up. I would however try to mitigate this by going for newer condos.

b) If I don’t find a tenant for the apartment, I’ll need to have enough money to deal with months of no rent.  However, this is probably not too likely since the vacancy rate for rentals in Vancouver is very low.

I did some calculations, I would probably receive a passive income cash flow of $300 to $500 per month from the downtown condo which I could use to lower the cost of the condo I live in.  However, rental income is taxable and although there are a lot of deductions I can put towards it (like maintenance fees, mortgage interest income) but after all that’s said and done, I will likely have to pay income taxes which lowers the real cash flow to something like $200 to $400 per month.  If the tenant doesn’t want the parking spot, I could probably rent out that parking spot too for $50 to $100 a month.

Some of the pros to this is that I get to play land lady again (I actually sadistically kind of enjoy this, I don’t know why) and I will probably get an extra key for myself and can use the amenities the downtown condo has to offer, like free parking.

Buy Real Estate Again Option B

Another real estate option (must to the chagrin of the real estate bears) would be to buy a duplex or a triplex or something that has a basement suite potential and do it all over again.  However, if I were to do it over again, I would make sure the place is new already because rats and mold don’t fly with me anymore.  I’m not sure how rentable a basement suite is in a duplex (probably much less possibility to rent out than an apartment) but could be done.  I would have to put in more of a down payment than option A, obviously.

Invest It

Another option is to poor this money into the stock market or into index funds.  A part of me is leery about this just because the stock market seems currently over valued or at 52 week highs.  The last thing I want is to see my hard earned lottery type money disappear because of the erratic bipolar moods of Mr. Market.

If I didn’t have a short timeline to use this money, pouring the money into dividend stocks would be a good option because of the likely possibility that I could generate about $400 in monthly dividend income from this or at least $5000+ annually (a reasonable 3.5% dividend portfolio payout rate).  Of course, with the better taxable benefits of dividend income, I would get taxed less.  When I sell, I will have to pay capital gains tax depending on if I made a profit on the dividend stock.

Do Nothing

The safest and most boring option (probably not safe since this would not even account for inflation costs) would be to leave this money in my high interest savings account at Tangerine.  The high interest savings account generates a monthly interest of 1.65%.  which equates to about $200 a month.  This will be taxed at my marginal rate so it works out to be even less.

Update – January, 2018

I’m definitely glad that I didn’t take the “do nothing option” when it came to managing my new windfall back in the day!

I thought it might be helpful if I revisited this article to tell readers about the choices that I decided on, and how they panned out.  The first thing I did was max out my TFSA and RRSP, using my discount brokerage account, see my Questrade review for more information on just how I handle those logistics.  I have been pleasantly surprised by the market returns since I made these investments!

Recently (about 18 months ago), I decided to take the chunk of this that I still had sitting in my high interest savings account (a pretty small amount) and try out these new robo advisor platforms.  They are pretty neat overall, but I’m still not sure about the fees.  You can check out my Wealthsimple review for more information on how the experience went.  The summary is that I really enjoyed the hands-off nature of the platforms, but I’m not crazy about paying.6% MER or so for something I could do on my own.  Definitely a solid option for a lot of Canadians though!

Readers, what would you do with $150K?

Article comments

Nightvid Cole says:

Well, as I’m a grad student who recently lost research funding and is stuck as a TA again, I think the answer is obvious…

Kyle says:

I’m sorry to hear about that NC. I don’t envy young academics by any means.

Mayank says:

+! for Tracey’s idea. You can stick your money in your savings account, and shift say, 10k to an index fund every month.


you can keep 75k in savings permanently, and invest the rest of the 75k in index funds over the period of an year.

I’d suggest to keep away from real estate too, especially since you did not enjoy that experience. You have done good to profit from it, now it’s time to move on.

Young says:

@Mayank- Yeah, I don’t know. I have it in a savings account right now. Still being noncommital except for maxing out TFSA and RRSP.

AS says:

For now, I would invest it into the dividend index funds/preferred stocks. I agree – the overall market seems to be on a bit of a high. I have a chunk, though not quite as hefty as yours, to invest right now too. I’m waiting for the market to cool a bit before throwing it in.

As for condos, if you are considering real estate (and I really hope you’ll reconsider) – look for Older condos, rather than newer. Seek out older condos that can be easily re-painted, gussied up – with minor renovations if you’d like. Ones that have good Strata Councils, who have been maintaining the property well, have large reserves and stable maintainence fees.

Not to put the OCD in overdrive, but this takes a lot more time to research (looking at Strata minutes and whatnot). The rent on a new-ish place and a nice-looking (maybe minorly renovated) old place in downtown Vancouver is not that far apart. The price to buy it, however, can be significant.

When you buy new, you pay a premium for it. No matter when you sell, unless it’s in a upswing market like we’ve had in Vancouver for a while – you’re not going to make up that difference when a condo is a number of years older and less stylish/trendy. Older places maintain their value for what they are longer, and you don’t pay a premium either.

Also, for a rental, avoid places with swimming pools or excessive amounts of amenities. You end up paying for those with your maintainence fees, and also for when they inevitably break down. The more things that can break, the greater your risk.

Young says:

@AS- Thanks AS! Yes, places with pools and $300 + strata fees scare the bajeezus out of me.

30kto30million says:

Instead of a Porsche Cayman I’d go with a 911 Turbo 😉

Nelson says:

Dear Internet Girlfriend Young and Thrifty:

I am going to show you how seriously I want you to stay away from Vancouver real estate, a bubble that’s obviously collapsing as we speak. Are you ready?

If you buy a condo, we are finished.

I hope that accurately conveys how much I am against this.

P.S. Call me.

Teacher Man says:

The award for best PF comment of the day goes to…

Young says:

@Nelson- LOL…Maybe I should definitely get a condo then? (jk). Yeah more I think about it the more I realize that condos are a bad idea.

krantcents says:

I would definitely invest it! I think I would look at real estate first, but it may be too late. It is a seller’s market right now in southern California so I may invest it in the stock market.

Young says:

@krantcents- I’d love to live in Socal 🙂 maybe we could be neighbours lol.

Josh @ Live Well Simply says:

In certain parts of the world, real estate prices are low. I wouldn’t say they are low in the Vancouver Canada part of the world. 🙂 That being said, I’d probably go 50/50 stocks and real estate. REIT’s are good if you don’t want the headache of landlording.

Tracey H says:

I agree with BeachBoy. Prices are definitely NOT low right now in Vancouver. I’d gradually put the money into the stock market (10k/month for 15 months or even 5k/month for 30 months) to help with market timing. And I’d diversify those investments. Max out your TFSA and (depending on your income level) your RRSPs as well. Personally, I think it’s time for you to talk to an independent financial advisor.

Young says:

@Tracey- That’s a brilliant idea! It’s like dollar coast averaging. I am definitely planning to max out TFSA and pay back the HBP. Good point about the financial advisor too- I’ll look into it.

Hope says:

You do not put after tax dollars in a RRSP. Why tax the dollar twice? It was after tax going into and out of the real estate and it will be taxed again coming out of the RRSP. Better to put it in a TFSA. Just saying that you always need to be thinking of the Taxman.

BeachBoy says:

“because prices are low right now.” are you crazy? Prices are not anywhere near low!!
I would def. Rent and invest, in dividend paying stuff or fill tfsa with regular taxed income and the rest unregistered and dividend paying.
IMO it’s insane to buy right now.
Oh and by the way it’s Porsche:-)

Young says:

@BeachBoy- D’oh! Me and my spelling mistakes 🙁 Thanks for catching it. Yeah, thank you readers you guys are always the voice of reason!

You really did thought this one out, didn’t you. I’d say you have a point with the condo. 😉

Looks like you have had some success with the Vancouver real estate market. Now you just have to decide what you’ll do! I would invest $150K. I don’t know how (yet), but like you, I’d be looking into how to make more money from it.

Young says:

@Tushar- REALLY Tushar? LOL aren’t you stating the obvious? But yes, that would be my goal- now just need to figure out means to get there.