6 Best Investments for Your FHSA in Canada (2026)

The First Home Savings Account (FHSA) is Canada’s newest and most powerful savings tool for first-time home buyers. Launched in 2023, it combines the best features of TFSAs and RRSPs—tax-deductible contributions AND tax-free withdrawals.

But here’s the catch: most Canadians don’t know what to actually invest in once they open an FHSA.

🏠 FHSA Quick Facts (2026)

Annual Contribution Limit: $8,000

Lifetime Contribution Limit: $40,000

Contribution Tax Deduction: ✅ Yes (like RRSP)

Withdrawal Tax: ❌ None (like TFSA)

Must Be Used For: First home purchase (or forfeit tax benefits)

In this guide, I’ll break down the 6 best FHSA investments based on your home-buying timeline, from aggressive growth to capital preservation. By the end, you’ll know exactly what to buy inside your FHSA.

🎁 Open Your FHSA Today

Start saving for your first home with Wealthsimple and get $25 to invest.

Open Your FHSA Now

How to Choose the Right FHSA Investment

The #1 factor in choosing your FHSA investment is your home purchase timeline:

Let’s break down each investment option.

1. XGRO/VGRO (80% Stocks / 20% Bonds)

Best for: Home buyers with 10-15 year timelines

Recommended ETFs: XGRO (iShares), VGRO (Vanguard)
Asset Allocation: 80% global stocks / 20% bonds
Management Fee (MER): 0.20-0.24%
Expected Return: ~6-8% annually
Risk Level: Medium-High

Why XGRO/VGRO is the Top FHSA Choice for Long Timelines:

If you won't be buying a home for 10-15 years, XGRO or VGRO offers the ideal balance:

  • High growth potential (80% stocks)
  • Downside cushion (20% bonds)
  • Global diversification across 9,000+ companies
  • Automatic rebalancing by the fund manager
  • Ultra-low fees (0.20%)

How It Works:

XGRO holds a complete portfolio:

  • 80% global stocks (Canada, US, international, emerging markets)
  • 20% bonds (Canadian and global fixed income)

Tax Advantages in FHSA:

  • ✅ Contributions are tax-deductible (reduces your taxable income)
  • ✅ Growth is tax-free (no capital gains tax)
  • ✅ Withdrawals for home purchase are tax-free (unlike RRSP)

Example Scenario:

$8,000 annual FHSA contribution for 10 years in XGRO (7% return):

  • Total contributions: $80,000 (over lifetime limit, so $40,000 max)
  • Portfolio value at 7% after 5 years (max $40k contribution): ~$46,154
  • Tax savings from deductions: ~$12,000 (at 30% marginal rate)
  • Tax-free withdrawal: $46,154 (all yours for your down payment)

Compare this to a regular savings account and you're looking at tens of thousands in extra savings from growth and tax benefits.

💡 Quick Tip: XGRO and VGRO are nearly identical. XGRO has a slightly lower fee (0.20% vs. 0.24%) while VGRO has more Canadian exposure. Choose either—both are excellent.

Who Should Choose XGRO/VGRO:

Who Should Avoid XGRO/VGRO:

Open Your FHSA and Buy XGRO Today

Start building your down payment with tax-deductible contributions and tax-free growth.

Get Started Now

2. XEQT/VEQT (100% Stocks)

Best for: Home buyers with 15+ year timelines or high risk tolerance

Recommended ETFs: XEQT (iShares), VEQT (Vanguard)
Asset Allocation: 100% global stocks (0% bonds)
Management Fee (MER): 0.20-0.24%
Expected Return: ~8-10% annually
Risk Level: High

Why XEQT/VEQT Works for Long FHSA Timelines:

If you're a young Canadian (early 20s) who won't buy a home until your mid-30s, XEQT offers maximum growth potential:

  • Highest expected returns long-term (8-10% annually)
  • True global diversification (9,000+ stocks)
  • No bonds dragging down returns
  • Perfect for 15+ year horizons

The Trade-Off:

100% equity means higher volatility. If the market crashes 30% in year 3, your FHSA will drop significantly—but you have time to recover.

Tax Advantages:

Same as XGRO:

  • ✅ Tax-deductible contributions
  • ✅ Tax-free growth
  • ✅ Tax-free withdrawals for home purchase

When XEQT Makes Sense:

  • You're in your early-to-mid 20s
  • You're flexible on home purchase timing
  • You can tolerate market swings
  • You're prioritizing maximum growth

⚠️ Important Timeline Warning

If you're planning to buy a home within 5-7 years, do NOT use XEQT. A market crash right before your purchase could devastate your down payment savings. Stick with XGRO or more conservative options.

Who Should Choose XEQT/VEQT:

Who Should Avoid XEQT/VEQT:

3. XBAL/VBAL (60% Stocks / 40% Bonds)

Best for: Home buyers with 5-10 year timelines

Recommended ETFs: XBAL (iShares), VBAL (Vanguard)
Asset Allocation: 60% stocks / 40% bonds
Management Fee (MER): 0.20-0.24%
Expected Return: ~5-6% annually
Risk Level: Medium

Why XBAL/VBAL is Ideal for Mid-Range Timelines:

If you're planning to buy a home in 5-10 years, you need a balance between growth and stability. XBAL's 60/40 split provides:

  • Moderate growth from 60% stocks
  • Significant downside protection from 40% bonds
  • Lower volatility than XGRO or XEQT
  • Reduced risk of capital loss near purchase date

How It Compares:

During a 30% market crash:

  • XEQT (100% equity): -30% drop
  • XGRO (80/20): -24% drop
  • XBAL (60/40): -18% drop ← More stable

Best For:

  • First-time buyers with 5-10 year timelines
  • Conservative savers who still want some growth
  • Those who prioritize capital preservation over maximum returns

Who Should Choose XBAL/VBAL:

Maximize Your FHSA Tax Benefits

Every dollar you contribute reduces your taxes. Invest in XGRO or XBAL and watch your down payment grow tax-free.

Open Your FHSA

4. GICs (Guaranteed Investment Certificates)

Best for: Home buyers with 1-5 year timelines

Current Rates (2026): 3-5% depending on term
Risk Level: None (principal guaranteed)
Tax Treatment: Interest grows tax-free in FHSA
Liquidity: Low (locked in for term)

Why GICs are Perfect for Short Timelines:

If you're buying a home within 1-5 years, you cannot afford stock market volatility. GICs offer:

  • Guaranteed principal (you can't lose money)
  • Predictable returns (fixed interest rate)
  • CDIC insured (up to $100,000 per institution)
  • Tax-free growth inside FHSA (huge benefit)

How GICs Work in an FHSA:

  1. You buy a GIC with a 1-5 year term
  2. It pays a fixed interest rate (e.g., 4.5% annually)
  3. Interest compounds tax-free in your FHSA
  4. At maturity, you have guaranteed funds for your down payment

Example:

$8,000 per year for 3 years in a 4% GIC:

  • Total contributions: $24,000
  • Value after 3 years: ~$25,800
  • Tax deduction savings: ~$7,200 (at 30% tax rate)
  • Tax-free withdrawal: $25,800

Why This is Powerful:

Normally, GIC interest is fully taxable (at your marginal rate). In an FHSA, it grows completely tax-free, making GICs far more attractive than holding them in a regular account.

💡 Pro Tip: Use a GIC ladder (1-year, 2-year, 3-year terms) to maintain liquidity and flexibility. This way, you have access to funds every year instead of locking everything up for 5 years.

Who Should Choose GICs:

Who Should Avoid GICs:

5. High-Interest Savings Account (HISA)

Best for: Imminent home purchases (0-2 years)

Current Rates (2026): 2.5-4% depending on provider
Risk Level: None
Tax Treatment: Interest grows tax-free in FHSA
Liquidity: High (instant access)

Why HISA Works for Imminent Purchases:

If you're buying a home this year or next, you need immediate access to your down payment. A high-interest savings account provides:

  • Zero risk (fully liquid, CDIC insured)
  • Instant access to funds
  • Competitive interest (2.5-4%)
  • Tax-free growth in FHSA

Best Providers:

  • Wealthsimple Cash: ~3% interest
  • EQ Bank: ~2.5-3.5% (rates vary)
  • Tangerine, Simplii: Promotional rates (often 4-5% for limited time)

How It Works:

You park your FHSA contributions in a high-interest savings account, earning guaranteed interest. When you're ready to buy, your funds are immediately available—no selling stocks or waiting for GIC maturity.

Who Should Choose HISA:

Who Should Avoid HISA:

6. Target-Date Funds

Best for: Set-and-forget savers with specific purchase dates

How They Work:

Target-date funds automatically shift from stocks to bonds as your target date approaches. For example:

  • Target 2030 Fund (buying home in ~2030)
    • Today: 70% stocks / 30% bonds
    • In 2028: 50% stocks / 50% bonds
    • In 2030: 30% stocks / 70% bonds

Benefits:

  • Fully automated de-risking over time
  • No rebalancing needed
  • Matches your home purchase timeline

Drawbacks:

  • Higher fees (often 0.5-0.8% MER)
  • Less control over asset allocation
  • May become too conservative too soon

Best Options in Canada:

  • Vanguard Target Retirement Funds
  • BlackRock LifePath Index Funds

Who Should Choose Target-Date Funds:

Your First Home Starts Here

The FHSA combines tax deductions with tax-free growth. Open your account and start saving smarter.

Get Your $25 Bonus

Quick Decision Guide: What Should You Buy?

| Time Until Home Purchase | Best Investment | Expected Return | Risk Level | |--------------------------|----------------|-----------------|------------| | **0-2 years** | High-Interest Savings Account | 2.5-4% | None | | **1-5 years** | GICs (laddered) | 3-5% | None | | **5-10 years** | XBAL/VBAL (60/40) | 5-6% | Medium | | **10-15 years** | XGRO/VGRO (80/20) | 6-8% | Medium-High | | **15+ years** | XEQT/VEQT (100% equity) | 8-10% | High | | **Flexible/Unsure** | XGRO or GIC Ladder | 4-8% | Medium |

Our Top Recommendation: XGRO for Most FHSA Savers

For most Canadians in their late 20s to early 30s, XGRO (or VGRO) is the ideal FHSA investment because:

✅ 10-15 year timeline matches typical first-time buyer profiles ✅ 80% stocks provide strong growth potential ✅ 20% bonds cushion market downturns ✅ 0.20% MER keeps fees ultra-low ✅ Automatic rebalancing means zero maintenance ✅ Tax-free growth + tax-deductible contributions maximize savings

The Math:

Contributing $8,000 annually for 5 years (max $40,000):

Total benefit: Your $40,000 in contributions becomes $46,154 for your down payment, AND you save $12,000 on taxes. That’s a massive advantage over regular savings.

How to Open an FHSA and Start Investing

Step 1: Confirm Your Eligibility

You can open an FHSA if:

Step 2: Open an FHSA

Step 3: Contribute and Invest

Step 4: Track Your Timeline

Adjust your investment as your purchase date approaches:

🏠 Open Your FHSA Before the Year Ends

Maximize your tax deductions and start growing your down payment tax-free. Get $25 to invest.

Open Your FHSA Now →

Common FHSA Investment Mistakes to Avoid

❌ Mistake #1: Leaving Contributions in Cash

Many Canadians contribute to their FHSA but never invest the money. Cash earns 0% and gets destroyed by inflation. Always invest immediately.

❌ Mistake #2: Choosing Investments That Don’t Match Your Timeline

Don’t put 100% equity (XEQT) if you’re buying in 3 years. Don’t put GICs if you’re buying in 15 years. Match the investment to your timeline.

❌ Mistake #3: Not Using the Full Contribution Room

The FHSA’s $8,000 annual limit and $40,000 lifetime cap are use-it-or-lose-it. Unlike RRSPs, unused room does not carry forward indefinitely. Maximize contributions while you can.

❌ Mistake #4: Ignoring the Tax Deduction

FHSA contributions are tax-deductible (like RRSPs). If you’re in the 30% tax bracket, an $8,000 contribution saves you $2,400 on taxes. Don’t forget to claim this on your return.

❌ Mistake #5: Panic Selling During Downturns

If you choose XGRO or XEQT and the market drops 20%, don’t panic sell. If you have 10+ years, you have time to recover. Stick with your plan.

FHSA vs. TFSA vs. RRSP: Where Should You Save?

Question: Should I use my FHSA, TFSA, or RRSP for home savings?

Answer: FHSA is the clear winner for first-time buyers because it combines the best of both:

Feature FHSA TFSA RRSP
Contributions Tax-Deductible? ✅ Yes ❌ No ✅ Yes
Withdrawals Tax-Free? ✅ Yes (for home) ✅ Yes ❌ No
Annual Limit (2026) $8,000 $7,000 18% of income
Lifetime Limit $40,000 Unlimited Varies
Best For First home Flexible savings Retirement

Bottom Line: Use your FHSA first for home savings, then use TFSA for additional savings if needed.

The Bottom Line

The best FHSA investment depends on when you’re buying your home:

For most first-time buyers in their late 20s to early 30s, XGRO (or VGRO) offers the ideal balance of growth and stability for a 10-15 year timeline.

Don’t let your FHSA sit empty. Open an account, contribute the $8,000 annual max, invest in XGRO, and let tax-free compound growth build your down payment.

Your future home is waiting.

🎁 Ready to Start Saving for Your First Home?

Open your FHSA with Wealthsimple and get $25 towards your down payment.

Get Your $25 Bonus

Disclosure: This post contains referral links. I may receive compensation if you sign up through these links, but this doesn’t affect my honest assessment. The FHSA is an incredibly powerful tool for first-time home buyers, and the investments listed will help you maximize your savings.