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Benefits of Alternative Investments: The Case for the Mortgage Investment Corporation

22 March, 2017 / by Bryan Jaskolka

Banks, institutions and high net-worth individuals have long appreciated mortgages as an alternative investment. Now, accredited investors can also use mortgages to grow their wealth.

Make money on debt. That’s the general idea behind the Mortgage Investment Corporation (MIC), an alternative investment strategy that allows people to generate regular monthly income through interest and dividend payments. As demand for alternative investments grow, more investors are looking to MICs to secure their financial future.

Alternative Investment Market Is Surging

The market for alternative investments is expected to grow fivefold to reach nearly $14 trillion by 2020, according to PwC.[1] A huge chunk of that market will be dedicated to mortgage and real estate investments. PwC data show that a whopping 41% of alternative investments will be concentrated in real estate. That’s up from the current rate of 38%.

Since 2005, alternative investments have grown twice as fast as traditional asset classes. This suggests investors are beginning to think outside the box to secure their financial future.[2]

Mortgage Investment Corporation: An Introduction

Mortgage investment has long been a viable money-making strategy for institutional investors, wealth managers and hedge funds. It wasn’t until the Mortgage Investment Corporation came along that the same benefits were extended to private accredited investors looking to grow their existing wealth. Now, accredited investors can put their money in a Mortgage Investment Corporation to produce monthly returns without the burden of issuing a mortgage, negotiating its terms and doing all the paperwork. The MIC does that for you, leaving you to focus on growing your investment by purchasing more shares in the program.

How a MIC Works

A MIC works by letting investors pool their money to be lent out as mortgages. Funds deposited into the MIC are exchanged for shares proportionate to the investor’s total capital (usually that’s $1 preferred share for every $1 invested). Funds can also be transferred from other registered investment accounts, such as RRSPs and TFSAs.

Investors have been turning to MICs as part of a broader push toward alternative investments, which refer to assets other than stocks, bonds and cash (i.e., the conventional investment types). With the bull market entering its eighth year, investors are no longer comfortable putting money into the conventional market long term. A weak global economy, political uncertainty and other risks have created a multi-trillion-dollar alternative investment market that experts say will grow five-fold by 2020.[3] Real estate and Mortgage Investment Corporations are near the top of the list.

Historical Performance

The historical performance of MICs has largely outperformed equities and bonds in terms of annualized returns, with some of the leading funds generating net gains of up to 8-10% each year. MICs can also provide steady growth by investing in stable real estate markets in major urban centres that have the highest residential demand.  Last year, real estate was the main driver of Canada’s economic growth, and mortgage debt now represents about 75% of national GDP. In short: real estate is the bedrock of the Canadian economy, and MICs provide solid exposure to that market.

As a leading alternative investment, mortgages provide stability, liquidity and consistent growth during volatile times. This combination not only shields your portfolio against market volatility, it can do so while providing you with a steady stream of income that grows over time. To explore how a Mortgage Investment Corporation can protect and grow your wealth, visit Canadian Mortgages Inc. at http://cmimic.ca/.

MIC Shares are available to qualified and accredited investors in BC, AB, ON, and QC and are offered through Waverly Financial Corporation, an Exempt Market Dealer.


References

[1] Svea Herbst-Bayliss (June 28, 2015). “Alternative investment growth to boom in next five years: report.” Reuters.

[2] McKinsey (February 2015). “The $64 trillion question: Convergence in asset management.”

[3] Svea Herbst-Bayliss (June 28, 2015). “Alternative investment growth to boom in next five years: report.” Reuters.

          

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