Your Asset Mix and Retirement Goals
Money Managers will often refer to risk as being the level of uncertainty about the returns expected from an investment. In most cases risk can simply be defined as the amount of volatility compared to a projected market return. You might also define risk as the amount of money you think you could lose and still sleep through the night.
In my opinion, being able to understand what you are invested in, and why, is very important when considering taking financial risks. A good test is to ask, “Could I explain to a 12 year old in less than a minute why I hold a particular asset in my investment portfolio?” It should be that simple.
Some years ago two researchers, Martin Leibowitz and Terence Langetieg of Salomon Brothers Inc., issued a report to the pension fund industry called, “Shortfall Risks and the Asset Allocation Decision”. In this report they used widely accepted historical return data compiled by the firm Ibotson Associates. The report found that there was a 36% chance that stocks would underperform bonds in any five year period. They also found that there was a 24% chance that stocks will underperform bonds in any 20 year period. Of course, that also means that there was a 76% chance that stocks would outperform bonds in any 20 year period.
As many Canadians are now starting to look at retirement, over the coming years it will become prudent to rebalance RRSP investment portfolios to decrease future investment risk. Using standard return and risk assumptions and a five year time horizon, Leibowitz and Langetieg concluded that an asset allocation of 30% stock and 70% bonds would result in a higher probability that an investor would meet their goals.
When constructing a fixed income bond portfolio the Money Manager will consider interest rates, maturities, redemption options and the credit rating of the bond issuer. The Managers would normally structure the portfolio with a mix of government, provincial, municipal and corporate bonds. In order for an Investor to reduce investment risk they might consider replacing the corporate bonds in the fixed income/bond portion of their investment portfolio with quality Canadian first mortgages. In addition to increasing the interest yield on your portfolio, an investment in first mortgages can offer substantially increased security when compared to corporate bonds as an asset class.
First Accredit Mortgage Corp., a Mortgage Investment Corporation (MIC) managed by Great Pacific Mortgage & Investment Ltd., invests exclusively in first mortgages. Since 2002, this MIC has offered both large and small investors easy access to investment in Canadian first mortgages while producing an annual historic yield in the range of 7.95% to 10.95%.
Paul E. Croy
Video: Why Do You Work at Great Pacific?
Paul E. Croy explains why he likes to work at Great Pacific Mortgage & Investments. He also talks about balancing investment portfolios and mentions MICs are suitable for replacing bonds or fixed income portions of a portfolio.
Mortgage Investment Corporation Videos
2009 The Year That Was
Mortgage Investment Corporation (MIC) financial highlights in 2009 and outlook for 2010. – Rory Campbell
What is a Mortgage Investment Corporation (MIC)?
What is a Mortgage Investment Corporation (MIC) and who would invest in MICs? – Rory Campbell, Jeffery Moses & Walt Neufeld
What is the risk of investing in Mortgage Investment Corporations?
A discussion on the risk of investing in Mortgage Investment Corporation (MIC) Funds at Great Pacific Mortgage & Investments. – Rory Campbell and Walt Neufeld
What are the Average Yields Earned by Great Pacific MIC Funds?
Rory Campbell and Jeffery Moses discuss the current and historical yields of the MIC funds they manage. Investing in MICs is not like investing in stocks. It is a slow process of getting rich.
Information about Mortgage Investment Corporations – Fine Print, Dividends & Redeeming Funds
Jeffery Moses discusses the fine print of Mortgage Investment Corporations (MICs). He also talks about how investors redeem their MIC funds and how Great Pacific distributes MIC dividends.
Who Borrows from a Mortgage Investment Corporation and Are the Rates Higher?
Walt Neufeld answers the question, “Who Borrows from a Mortgage Investment Corporation (MIC)?”. He also discusses the rates for borrowers and explains why the rates may be higher.
What is a Foreclosure? – Mortgage Investment Corporations
Rory Campbell and Walt Neufeld explain what is a foreclosure and how it is used to protect mortgage investments in Mortgage Investment Corporations.
Why Do You Work at Great Pacific?
Paul E. Croy explains why he likes to work at Great Pacific Mortgage & Investments. He also talks about balancing investment portfolios and mentions MICs are suitable for replacing bonds or fixed income portions of a portfolio.
Video: Who Borrows from a Mortgage Investment Corporation and Are the Rates Higher?
Walt Neufeld answers the question, “Who Borrows from a Mortgage Investment Corporation (MIC)?”. He also discusses the rates for borrowers and explains why the rates may be higher.
Video: Information about Mortgage Investment Corporations – Fine Print, Dividends & Redeeming Funds
Jeffery Moses discusses the fine print of Mortgage Investment Corporations (MICs). He also talks about how investors redeem their MIC funds and how Great Pacific distributes MIC dividends.
Video: What are the Average Yields Earned by Great Pacific MIC Funds?
Rory Campbell and Jeffery Moses discuss the current and historical yields of the MIC funds they manage. Investing in MICs is not like investing in stocks. It is a slow process of getting rich.
Video: What is a Mortgage Investment Corporation (MIC)?
What is a Mortgage Investment Corporation (MIC) and who would invest in MICs? – Rory Campbell, Jeffery Moses & Walt Neufeld.
Video: 2009 The Year That Was
Mortgage Investment Corporation (MIC) financial highlights in 2009 and outlook for 2010. – Rory Campbell
5 Things You Should Ask Before Investing in a MIC
There are a lot of questions you should ask before making any investment. Here’s what we recommend you ask before putting your money into a MIC.
- Are you speaking to the person who will be making the investment or a salesperson?
- Can you call up any time to ask about decisions that have been made?
- What is the history of performance on this MIC?
- Does the MIC offer complete disclosure of its mortgage investment details?
- How does the MIC diversify its mortgage investments to protect investors?
- Is there a provision for losses and liquidity?
Not all MICs are the same – A quality MIC investment will provide full disclosure of mortgage investments.
What is a MIC? – Why You Should Know
Mortgage Investment Corporations (MICs) are designed specifically for mortgage lending in Canada. MICs lend to qualified borrowers in a ‘niche’ mortgage market who may be finding traditional mortgage lending is not getting them the results they need. A MIC mortgage portfolio can include everything from small second mortgages on residential property to commercial and development mortgages on new projects.
To many experienced investors it’s a no-brainer to include MICs in their investment portfolio. MICs don’t have the volatility of stock markets and they offer returns that are significantly higher than those from money market products.
Owning shares in a MIC allows investors to participate in a diversified and secured pool of mortgages. The income is either paid out on a regular basis or can be reinvested for growth.
A MIC is the investment that everyone should have in their portfolio because it’s secure and will make you a lot of money. Pretty simple.
Find out more about MICs here.
