Your financial planner will give you the same advice this year as last – invest in a well diversified portfolio of stocks, bonds, and mutual funds. The market will change…but the advice is always the same. Why are you only allowed to invest in sanitized, watered down, and costly (up front, ongoing, and trailer fees) investment vehicles. STOP! It’s time to take control of your future and here are three ways you can increase your RSP investment today!
Self Directed RSP
Did you know that the majority of registered fund accounts can be self directed? This means you as a Canadian can take control of your retirement funds and choose the vehicles you invest in as well as the type of returns and fees (if any) you will experience.Can you imagine opening your quarterly investment statement to see a steady increase without the cream being scooped off the top before you see the net return? No more anxiety seeing your hard earned dollars evaporate as your principle gets gobbled up by uncertainty in the global markets.
Private Mortgage Investment
The first option available with your RSPs is Private Mortgage Investment. This is when through your self directed RSP account we find pre-qualified lending opportunities in second mortgages. Unlike mutual funds, the principle invested is registered against a real asset and your interest is legally protected as your name is on the title to the property. The loans never go over 85% of the appraised market value of the home so there is always safety that you are not over leveraged. The average return on a second mortgage is 15% annually so this is a great option for a portion of your RSP portfolio.
Syndicated Mortgage Opportunity
Another excellent way to get a great return for your RSPs is in a syndicated mortgage. This is where a group of investors pool their funds to fund a single development project. This method is preferred by those who are not looking to have a hand’s on role in the day to day operation as in private mortgage investment. Generally speaking, there is a minimum investment of 25K in these types of mortgage and a defined term (2 -4 yrs.) where you will receive regular investment income of 8% annually (paid quarterly). Another feature here is that typically there is a deferred lender’s bonus on the exit of the project that depending on the success of the project can provide a potential additional return of 12-20%.
Real Estate Investment RSP Mortgage Swap
There is another option for those who are looking to get down in the trenches and invest directly into investment real estate. The Self Directed RSP Mortgage Swap is a creative and liberating way to utilize your registered funds to purchase cash flowing investment real estate. Obviously the returns depend on the individual investment opportunity and the terms of the mortgage loan. Having a great team including realtors, appraisers, lawyers, and of course a Mortgage Broker is going to be essential in finding and structuring a good investment.
Ask yourself this question – Why would I settle for an uncertain, mediocre return at best while another year goes by and my retirement gets that much closer without a positive result! A passive attitude will get you one guarantee – the same results as last year. There are RSP eligible investments that are much safer than your mutual fund that produce the consistent returns that real estate provides. Getting more information is simple – give me a quick heads up in the comments section below and I will answer the questions that always accompany a new path. Your best year is a click away…