Alternative Investments In Ontario
Getting the right mix of securities is very important if you want to have a steady and regular return on your investments.
Alternative Investments are the ideal option and are now accessible to retail investors in Ontario.
Alternative Investments exclude securities such as stocks, bonds, and mutual funds. These investments can offer high returns and, as such, they are ideal to diversifying portfolios to achieve higher returns. However, as with any investment there can be risks to consider.
These alternative investments were only accessible to a small percentage of investors (about 200,000 in Ontario) before the Offering Memorandum exemption was passed in 2016. Since then around four million Ontario residents now qualify for exempt market and alternative investments. These exemptions were developed after years of discussions between regulators and other interested parties to make the market more robust.
Alternative investments are ideal to diversifying portfolios to achieve higher returns
7 types of popular alternative investments (most of which are eligible for Registered Accounts) are:
- Real Estate
The purchase, ownership, management, rental and/or sale of residential or commercial buildings and lands for profit. Ideal for both mid or long-term investment strategies.
- Hedge Funds
Similar to mutual funds, these are securities and other financial instruments you invest in collaboration with other investors.
Used by purchasers and/or developers of real estate properties to raise funds to buy/construct real estate. These loans are secured by the borrower’s property. The borrower is contractually obligated to pay back the investment, failing which, the property is repossessed or foreclosed on to finance the repayment.
- Mortgage Investment Corporations (MICs)
An investment and lending company designed specifically for mortgage lending in Canada
- Syndicated Mortgages
Differ from other regular mortgages only in that the lender is a group of investors.
- Recurring Monthly Revenue Opportunities
Any time a company creates income that is predictable and reliable month-over-month, it is recurring revenue.
Think of a home alarm company collecting the recurring, monthly fees from thousands and thousands of ever expanding customers on 5 year rental contracts.
- Factoring Companies
Factoring is a transaction in which a business sells its account receivables, or invoices to a third party commercial financial company, known as the ‘factor’. The business pays a fee to the factor to have access to its funds now rather than wait 60 to 90 days.
Most alternative investments are eligible for registered accounts like RRSPs, TFSAs, RESPs and RIFs.
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