Mortgage-Backed Securities ("MBS") are
fixed-rate investments that represent an ownership interest in a
pool of many mortgages. Every month you'll receive a proportional
share of the interest and principal payments associated with those
mortgages. Generally, 4% to 6% of the principal is paid back to you
over the life of the investment. Because they are fully-guaranteed
by the Canadian Mortgage and Housing Corporation (CMHC), an agency
of the Government of Canada, you know your money is safe. One of
the primary benefits of MBS is the monthly income stream they
generate, making them well-suited to provide retirement income,
either inside or outside an RRIF. Even if you normally hold your
investments to maturity, it is nice to know that MBS are fully
marketable and can be sold at market value at any time.
Common Characteristics
Dollars to Invest/Time Horizon
Minimum investment is $5,000. Terms vary from one to 10 years.
Risk/Return
Fully guaranteed by CMHC, an agency of the Government of Canada.
There is essentially no risk with any investment held to
maturity--the full and timely payment of principal and interest is
guaranteed, regardless of the size of the investment. Very
competitive yields.
Liquidity
May be sold at any time prior to maturity.
Income
Interest and a portion of principal is fixed and paid monthly on
the 15th of each month.
Key Benefits
- Safest Canadian investments available in
Canada, regardless of the size of the investment.
- Fully guaranteed principal and interest
when held to maturity.
- Provides guaranteed regular payments of
income.
- Very competitive yields.
- High degree of liquidity.
- Low minimum investment required.
- RSP/RRIF eligible.
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