As we enter the “RRSP season” you may be considering investing in RRSP’s. The odds are that you’re likely going to be purchasing a mutual fund or GIC from your bank or financial advisor, but according to Greg Habstritt – Author of the RRSP secret, if you do, you could be making a big mistake.
Greg’s book, The RRSP Secret, is as much of a “tell all” of how the financial industry misuses your trust and loyalty as a client as much as it is a description of one of the best-kept RRSP secrets in Canada as well as the tools and knowledge you need to put them into action for yourself.
This book is a must read for every Canadian that has more than $10,000 invested in RRSPs TFSAs or even RESP’s. Not only does Greg do a great job of exposing one of the most significant problems in financial industry but he also teaches a strategy that is commonly used amongst institutional and high-net-worth investors (investors with more than million dollars to invest) that allows them to earn secured, consistent, predictable returns in excess of 10%, and he shows you exactly how to mimic the strategy inside your RRSP.
Greg didn’t create the strategy nor was he the first one to even use the strategy. In fact, the banks invented it, and it has been their most profitable product for hundreds of years. If you haven’t already guessed, (based on the category I write under) Greg’s book exposes how ordinary Canadians can lend their RRSPs money to other Canadians and Canadian businesses using mortgages, while still maintaining their RRSP (meaning you don’t have to cash out).
Now we all know that in Canada, mortgages are the most secure form of lending that is available. They provide an investor (like the bank) with a tangible asset to secure a loan (the house) and because of the associated paperwork it also provides a fixed rate of return with a set repayment schedule that must be met, and if it isn’t we all know the consequences of not meeting the obligations of a mortgage contract: foreclosure..
You see, like Greg, I also make a mental comparison between investing in mutual funds / the stock market and investing in mortgages, and here’s a summary of what runs through my head when I evaluate these investment vehicles:
Rate of Return
With the mortgage, my return as an investor is stated in the mortgage contract. With a mutual fund, no return is guaranteed. Past performance is not indicative of future returns, and I’m told the only way to benefit from mutual funds is by holding them over an extended period of time.
With a mortgage, if the borrower cannot make the payments, as an investor I have the right to foreclose on the property to recapture my investment and interest owing. With mutual funds or stocks when a fund is not performing, I have no way of recovering my investment other than waiting for the fund or stock to recover; which it may never do; and places me at risk for a potential higher future loss.
Fixed Income Stream
With a mortgage, I get a fixed monthly payment from the borrower which, as the investor is my personal income, and since the payment doesn’t change I know exactly the number to use in my budgeting and exactly how long the income will last. With a mutual fund portfolio or stock portfolio, to get an income you must sell shares on a monthly basis and since these share values are not guaranteed you never know how many shares you must sell to get the income amount that you require. These fluctuations in the share value make it tough to determine how long your portfolio will last you and once shares are sold they no longer can produce an income.
Now you may be wondering is this possible? Can I use my RRSPs to invest in mortgages? The answer is yes, you absolutely can!
Inside the book, Greg lays out with extraordinary detail and simplicity how you can get the same security and consistency that the banks get within your RRSP portfolio or any registered account in Canada (RESPs, RIF’s LIRA’s, etc.). He also shows you how it is possible to provide mortgages to people that are willing to pay 8 to 10% (or even more) to get access to the money they need, without you having to take on unnecessary risks within your portfolio.
What would it feel like to you if you knew that your RSP money was secured against a physical asset like a house? Would it make you feel safer, knowing that there is an actual asset protecting you in case something went wrong? Would you feel more confident about your retirement, knowing that your investments are locked in at a rate you choose, giving you the power to more accurately forecast your retirement income or the growth inside your investment portfolio up until retirement?
I bet you would, and it is for that reason that I believe this book is a must-read.
Plus I have licensed a stand-alone video series that Greg has created that walks you through all the important concepts of mortgage lending; it’s nearly 7 hours of practical investment advice that anyone considering investing in mortgages should watch. He sells this program for approximately $500, and through my relationship with Greg, you get it for free. (Just send me an email, and I will give you access to it).
Just to wrap up if you want to learn more about this strategy please get your copy of the book and call me. As a Verified Mortgage Planner, I can reinforce the lessons that are taught in the book and give you a set of rules to follow when reviewing applications and even from time to time introduce you to pre-screened (pre-approved) people that are willing to borrow from you.
PS – Don’t be too mad at your bank for not teaching you this, keep in mind it is their bread and butter, once you read this book you will become the bank’s competition.
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