What to do with $150K — Option #1: Buy real estate
One idea is to buy a condo. Yes, it might sound CRAZY but consider the benefits. For instance, if the real estate market starts to depreciate and the condo starts to lose value, you can always generate income by renting out the condo. (Or, if your area lets you, furnish it and earn money through short-term rentals).
Unfortunately, there are a few downsides to buying real estate.
a) Condos tend to swing up and down in value far more dramatically then single-family homes. This could force you to hold onto the property for longer than anticipated, as you wait for the market to recover.
b) If you don’t find a tenant for the unit, you'll need enough money in your monthly budget to pay the mortgage (a cost that should be paid by the rent a tenant pays).
Another real estate option is to skip a condo and buy a duplex or a triplex or something with suite potential. However, this option can be out of reach even with a $150,000 down payment in Canada's largest cities.
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Invest NowWhat to do with $150K — Option #2: Invest $150K
Another option is to invest this money in the stock market or into index funds.
If your investing time horizon is shorter, you could consider investing into companies that pay dividends. For instance, you could earn $400 per month if you bought stock in a company with a reasonable 3.5% dividend payout rate.
Investing in stock that pays dividends also provides a better tax rate (on these dividend earnings), meaning you can also reduce tax owed on invested earnings.
What to do with $150K — Option #3: Do nothing
The most boring option — and not the safest since your buying power would erode due to inflation — is to leave this money in a savings or chequing account.
Instead, consider depositing the funds into a 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.
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Start Trading TodayHow much you really take home with a salary of $150K?
Okay, so let's just say that $150K doesn't just magically appears in your bank account (boo, reality). That means you're going to have to make it.
But where you live will also impact how much of that $150K salary you really get to keep. That's because the after-tax take-home pay on a $150,000 salary will depend on the province or territory you live in. Each region in Canada sets it's own tax rate and its own tax brackets and while all provinces and territories are similar at the end of that year those tax differences can add up to a few thousand (or more).
To help, here’s a rough estimate of your after-tax income (based on 2024 tax rates) for each province based on earning an annual salary of $150K:
- Alberta: $106,000
- British Columbia: $105,000
- Manitoba: $102,500
- New Brunswick: $102,000
- Newfoundland & Labrador: $101,500
- Northwest Territories: $111,000
- Nova Scotia: $99,500
- Nunavut: $115,000
- Ontario: $105,000
- Prince Edward Island: $100,000
- Quebec: $98,000
- Saskatchewan: $106,000
- Yukon: $110,000
How to maximize your after-tax dollars regardless of where you live
Regardless of how much you earn — and keep in after-tax income — the general rule of thumb for financial prosperity is to follow the 50/30/20 rule. Using this rule 50% of your after-tax income is used to pay for essential needs, such as housing, food, heat and hydro. Another 30% is spent on fun things, like vacations, new clothes and dining out. The remaining 20% goes towards your saving and investment goals.
Getting started: How to turn $150K into a retirement nest egg
When starting your savings and investment journey, focus on quick, accessible cash that can be used during downturns. Called an emergency fund, this type of savings account helps you to smooth out any disruptions in your cashflow should you experience an unforeseen set back, such as a job loss or medical situation.
The general rule of thumb is to save between three and six months' of your annual salary in an emergency fund.
Based on a $150K salary (or windfall) that means setting aside $30,000 in an easily accessible account, such as a high interest savings account (HISA). Good options include:
Taking the next step: Saving for retirement
An emergency fund is great at preventing you from dipping into expensive debt, such as credit card cash advances or payday loans, but it's not great at getting your money working for you. For that you'll need to start investing. In most cases, this will start with contributions to your Tax-Free Savings Account (TFSA) and your registered retirement savings plan (RRSP).
Your TFSA will require after-tax dollars, while an RRSP contribution will give you a current tax-year tax deduction. Keep in mind, however, your maximum contribution for a RRSP is based on a percentage of your earned income. In 2024, the maximum you could contribute is 18% of your earned income. That means you could contribute $27,000 to your RRSP — 18% of $150K — for a tax refund of just under $11,800.
Hey! What would you do with $150K?
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