Young homeowners: Invest or pay down debt?

Liam bought a place when he was 21. Now, he wants some advice on what to do with the money he has left over once all expenses are paid



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(Getty Images / David Frank)

Q: I’m 21 and I’m currently purchasing a home in Calgary for $300k. I can afford to put roughly $1,500 away per month after all my expenses and mortgage payments are paid. I was unsure as to whether I should attempt to pay down my mortgage (at a rate of 2.7% on a five-year fixed) or invest the money and accrue roughly 6% to 8% annually. I was leaning more towards the investment route as I am young and will be using the property as a rental when I eventually decide to move on to the next place.

— Liam, Calgary, Alta.

Ayana Forward is a certified financial planner in Ottawa:  

Hi Liam, you are definitely on the right track as both options will help you grow your net worth.

Investing in a diversified portfolio of equities and fixed income securities would help to diversify your assets so that all of your wealth isn’t tied directly to real estate. It is important that you understand the risks involved with investing in securities and that there are no guarantees that you will consistently make a 6% to 8% annual return. Also be sure to take advantage of tax sheltered investing options such as your RRSP and TFSA.

On the other hand, increasing your mortgage payment is a guaranteed way to lower your outstanding debt. If you are willing to take on a little more risk for potentially more reward I suggest you seek guidance from a Certified Financial Planner to help make sure your investments are in line with your risk tolerance, time horizon and goals. Good luck.

RE Expert - Ayana ForwardAyana Forward is a real estate investor who also holds the Certified Financial Planner (CFP®) designation. Ayana is fee-based Financial Planner with Ryan Lamontagne Inc in Ottawa, ON.




Walter Melanson, lead analyst and founder, 

There are many different ways to look at this. But at 21, you definitely have age on your side. We consulted with our mortgage team over at and with today’s mortgage rates being so low it’s easy to see the advantages of using the money to invest versus paying down your mortgage.

Another advantage to using this extra monthly cash as part of your investment fund is because you do intend to change the use of this initial property sometime in the future—from primary residence to rental property. As a rental, the property will provide a tax advantage, in that you will be able to deduct the interest paid on the mortgage (among other tax deductions).

Keep in mind that when seeking advice on investments or even on how to structure real estate investments it’s always good to connect with a licensed advisor who can help you consider all factors that may affect your decision.

Is an income property right for you? »

RE Expert - Walter MelansonWalter Melanson is the co-founder and lead analyst at, Canada’s largest private sale franchise network. A background in finance, economics and technology, Walter’s true passion lies in building a more modern approach to buying and selling real estate.




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