MORTGAGE SOLUTIONS

Want an alternative to mutual funds? Choose a MIC.

Since the virtual collapse of the stock market back at the end of 2008, more and more individuals are looking elsewhere to store their nest egg, and ending up opting for a Mortgage Investment Corporation, or a MIC.

A MIC is similar to a mutual fund in the sense that investors pool their money to buy a variety of different assets. But instead of pooling it to buy stocks, they're buying real estate.  The funds are handled by a management company that, for a fee, chooses the real estate investments and pays out investor earnings.

The upside of a MIC is that it's a relatively safe investment vehicle to store your RRSP or other registered savings fund. While it won't get your rich overnight, it will offer you a steady return. And because it's tied to real estate – often in different markets across a province – the likelihood of property values tanking across the board is minimal.

That being said, real estate investments still go into arrears – and management companies still make poor investment choices. If you're thinking about investing in a MIC, make sure you research the management company before anything else, paying particular attention to the company's track record. Try to find a MIC that's been in existence for at least a few years and has a positive reputation.

It's also important to look beyond fancy ads or Powerpoint presentations. A slick appearance doesn't compensate for a lack of ethics. If possible, try to talk to current investors and see what their experience has been. Remember, also, that a guaranteed rate of return doesn't mean anything if the fund doesn't make any money in a given year – or if the management company is forced to pay you out of other investors' pockets.

Above anything else, remember that any type of investment vehicle carries its own form of risk. So protect yourself with the most information possible before jumping in – and don't forget to diversify!