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MBSs: Look before you leap
Before jumping into a Mortgage Backed Security (MBS) there are a few details that should be understood so that an informed decision can be made on what is being purchased.

Systematic Withdrawal Plans
When people retire, they are frequently advised to put their money into a Term deposit or a GIC and live off the interest. At first glance, this may seem to be a wise decision because the income from the interest initially appears to be sufficient to meet their needs. But a few details that should be understood so that an informed decision can be made on what is being purchased. Over the years, however, the income received decreases in real value because of the effects of Inflation and the taxes paid on interest income.

Mortgage Backed Securities
Mortgage Backed Securities (MBS) fulfill two important investment objectives. First, MBS are completely guaranteed by the federal government through the auspices of the National Housing Act. In fact, these securities are backed by the Canada Mortgage and Housing Corporation (CMHC). Secondly, the yields are often better for these securities than for comparable Government of Canada securities.

Reverse mortgages
Reverse mortgages are a relatively new phenomenon in Canada but are destined to become more popular. The concept is simple enough. A lender applies a mortgage against the borrower's Principal residence and purchases an annuity for an equivalent amount.

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Financial Services
MBSs: Look before you leap

Systematic Withdrawal Plans

Mortgage Backed Securities

Reverse mortgages