canada mortage bonds | Page 2 | General financial discussion | Discussion forum

You're incorrect about the requirements. Read the second half of ACIC's "How to Invest" page.

MICs are not deposit takers, so they cannot be members of CDIC. MICs sell shares, not term deposits, so deposit insurance doesn't apply. Redemption terms differ for each MIC.

MICs are for investors who are comfortable with non-guaranteed investments and who don't need short-term access to their capital. Because of your level of knowledge and your need for safety and liquidity, you should not stray from savings accounts and term deposits. MICs are neither guaranteed nor liquid.

The high eligibility requirements are imposed by ON law. Under BC & AB law, one only needs to sign the risk acknowledgement form (45-106F4). MICs are not allowed to let ON residents to invest under any rules other than ON rules.

There is one public MIC: MCAN Mortgage (MKP-T). The shares are traded on the Toronto Stock Exchange, so anyone with a brokerage account can buy them. The current yield is 8.6. As with all publicly traded shares, the price can be a roller-coaster. On the 3-year chart, you can see the price has gone from 13 to 8, and back to 11.5.

I have invested in ACIC for a year. The quarterly dividend cheques are all 2%, unless there was money invested for less than a quarter. I chose ACIC because it has the clearest marketing. For example, most MICs don't advertise their yield, and are even less upfront about their dividend history.

MICs do sell to ON residents, but only to those who meet the steep requirements of ON law. Regardless of what MIC you talk to, they'll tell you the same thing. For you to invest in a private MIC, either ON law has to change or you have to move to BC.

Of course Aviawest would sell to ON residents. But that doesn't mean this BC MIC lets ON residents play by BC rules. On page 44 of their OM (offering memorandum), in the subscription agreement for residents of Ontario, clause (b) stipulates that the purchaser is an accredited investor as defined by ON rules.

Ask the MIC how to invest. They'll send you the OM, financial statements, and subscription agreement. Ask for dividend history if it hasn't been given.

Are you close to meeting any of the requirements? If you can invest almost $150K, you can top it off with HELOC at today's low rate, but don't if you're far off. I still think you should stick to savings accounts and GICs. With high requirements, ON law doesn't think MICs are for neophytes.

Arrowhedge.com has the complete explanation of investor qualifications for all of Canada. To invest in MICs, investors qualify in one of 3 ways:

1. accredited investor exemption
2. offering memorandum exemption
3. minimum investment exemption

The accredited investor definition is the same for all of Canada. The minimum investment exemption means you invest $150K. The key for most people is to qualify under the OM exemption, which means to read the OM, sign the risk acknowledgement form, and invest $5K. Only BC, maritime provinces, and Yukon have OM exemption.

There is another investment from a private REIT called IGW REIT (PDF download; Acrobat required). They offer traditional REIT units and the new Income Priority Unit. IPUs have a fixed price and fixed yield of 8.5% for the 1-year series, and 9.25% for the 2-year series. The units automatically renew for another term unless you give a Notice of Maturity at least 60 days before maturity. IGW REIT is managed by a company called League. OM exemption is available for all provinces other than ON and QC.

doc said:

are you sure i do not fall into a eligible investor living in manitoba. and what is the minium amount u can put down

Actually, I'm sure you do fall into the eligible investor in MB category. The minimum investment is $1000. Why the heck are you asking me this? Check it out for yourself! I'm not your investment advisor; I'm your tipster. Do your own due diligence.