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With mortgage rates reaching new heights, how can you build wealth with homeownership off the table


A five-year conventional mortgage has risen from 4.79 per cent interest at the start of the year to 6.04 per cent. Thirty-year fixed rate mortgages rose above six per cent, a rate not seen since 2008, and 43 per cent of adults are putting their home buying plans on hold.

Relying on homeownership as a way to build your wealth might seem like an impossibility.

While owning a home has traditionally been perceived as a core element for building wealth, there are still ways you can make this happen.

The power of renting

People often tout the benefits of owning a home, but they ignore the benefits of renting.


According to the Canada Mortgage and Housing Corporation, the average rent for a two-bedroom apartment in October of 2021 was $1,771, an increase of about 6.5 per cent from the previous year.

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For the same period, nationally, the average scheduled monthly payments for new mortgage loans is $1563. For the first quarter of 2022, that amount was up to $1,635. While the average mortgage is cheaper than the average rent, it’s important to keep other costs of home ownership in mind.

To buy a home you need to make a down payment of at least three per cent. There are also costs such as insurance, property taxes and utilities that are added to monthly expenses.

If you calculate the difference between what you’re paying in rent and what you would be paying to own a home, you might be surprised. You can take the money you’re saving and build your wealth with smart investments.

Work toward retirement

A general rule of thumb is to have $1 million in savings when you retire.

However, if you regularly maximize your retirement contributions, you can build toward that goal.

When you contribute to a Registered Retirement Savings Plan (RRSP), you get the benefit of tax-deferred growth, meaning the money you invest isn’t taxed until you withdraw it. With savvy investing, you can use some of the interest you’ve accrued over the years to pay off the taxes, therefore getting more value for your dollar.

If you work for a company that matches your RRSP, definitely take advantage of this. Contribute as much as you can on a yearly basis, and you’ll watch as your retirement savings compound.

And remember, the more you invest early in life, the more time there is for interest to build.

Play the long game

The stock market is another foundation to build your investment savings from. In the words of Warren Buffett, “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

Investing money is a bit of a roller coaster. There are always peaks and valleys in the market, but if you stay on until the end, you’re pretty much assured to get off safely.

Right now, the market is a bit tumultuous, and fear of a recession is on people’s minds. Because of this, it’s a great time to invest.

Since stocks are trading low, that means your money will have more room to grow and your dollar will go further. Historically, stocks will rise in value, but you might have to wait longer to see these returns.

Playing the long game lets you weather the storm, confident in the knowledge that things have a way of balancing out.

Diversifying your investments

The old adage to not put all your eggs in one basket especially holds true when it comes to building wealth.

When you’re investing your hard earned money, look beyond just putting your cash into your RRSP or the stock market. Stocks, bonds and cash have been the traditional foundations of investing, and there are a number of ways you can invest your money.

You might consider putting some of your cash in a high-interest savings account. You can also invest in government savings bonds, and stocks of some of your favorite brands. The more diverse your portfolio, the better chances it will have of growing in value over time.

Consider alternative investments

Alternative investments, like investing in commodities or collectibles, is another way to build your wealth when you’re young.

No, you shouldn’t go out and spend all your money on action figures or pour it into cryptocurrency. But if you do your research, or have specialized knowledge about a certain industry, you might uncover something that could be worth investing in.

Alternative investments are often riskier than traditional ones, as the market for these isn’t regulated and the bottom can drop out at any moment. At the same time, it can yield a greater return than the conventional methods.

If this is an area that is of interest to you, consider fractional investing as a place to start. Fractional investments are where you contribute a small sum of money to purchase a share of an asset, like a piece of real estate or a work of art. Your investment becomes locked in for a period of time, but when the asset is sold, you get a proportional part of the profits and dividends.

Consider alternative paths to homeownership

If owning a home is important to you, but you’re not presently in a financial position to make this happen, there might be ways you can still achieve your dream.

You might want to consider property co-ownership, where you and friends or family invest in a property together and share the mortgage and other expenses.

If you work from home, you might be able to purchase a residence and deduct part of the space and your expenses from your taxes. This benefit can help offset the costs associated with homeownership. And if you are working from home and living in the city, you might consider relocating to a more suburban or rural setting where your dollar will have more of an impact.

When it comes to building your wealth, the best practice is to start early and diversify. A financial advisor can help you explore options that are available to you. And remember: the sooner you start saving for the future, the better off you’ll be.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.