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FSCO warns about some syndicated mortgages

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  • Neil Murphy | 11 Feb 2015, 06:41 PM Agree 0
    If it sounds too good to be true, than someone is describing it too well!
    Thank you for this article. You help clarify some misleading tactics that are occurring in the marketplace. Syndicated mortgage products paying 8% return is a riskier investment than a GIC. Any advisor who tells an investor that the syndicated mortgage is highly safe or guaranteed is not disclosing the true facts.
    Investments by themselves are neither good nor bad (well maybe after the fact…). You take on a particular risk and expect to be paid accordingly. The real question isn’t whether the syndicated mortgage is secure, but is if you are being compensated adequately for the risk you take.
    I look at each project and view its risk kind of like a stock. Earning 8-13% is in line with stock market returns. It’s paramount to educate the purchaser that you are buying a high yield instrument that needs to fit into the portfolio. It has a low correlation to most asset classes being held so should help reduce risk if used properly.
    The ‘secure’ part, or mortgage, is critical to ensuring recovery when things go sideways. Without this you would simply be an equity investor in a piece of land with potential.
    Neil Murphy
    The Synd
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