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Friday 7 March 2014

Buy a Property or Save for Retirement?

The biggest financial decision for Gen Y-ers these days is to choose between establishing a retirement savings fund and buying a property. Many people in their 20s or 30s can’t afford to have both, so it’s either one or the other. If you’re one of the majority, you need to start thinking about what really matters to you as a financial goal.


If you’re in your early 20s now, retirement could well be 40 to 50 years down the road. Still, it’s something that shouldn’t be left in the backburner. Many Gen Y-ers won’t be able to receive a single cent of pension because employers hire them only on a contractual, not on a full-time, basis.

Buying a property is something that’s best done in your 30s, which means you have to start saving for a down payment in your 20s. For an average-priced resale property in Canada, the usual down payment amount is $25,000 to $30,000. Houses and condos in Vancouver, Calgary, or Toronto require $5,000 to $15,000 more than that.

Most people will choose to buy a property and put off saving for retirement for another time. This is only natural. After all, the benefits of buying a home are immediate, and real estate properties generally increase in value over time—a value which can eventually be used for retirement.

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