Choosing your best Canadian investment strategy

Investing in the stock market has long been a staple strategy for growing wealth. However, the performance of specific indices, like the S&P/TSX Venture Composite Index, can sometimes paint a less favorable picture for investors. If you had invested $50,000 in this index five years ago, your investment would be worth around $48,000 today. This outcome highlights the volatility and risk inherent in equity markets and raises important considerations for Canadian investors looking to balance growth with stability.

The S&P/TSX Venture Composite Index: A Rocky Ride

The S&P/TSX Venture Composite Index reflects the performance of the Canadian venture capital market. This index includes stocks from small-cap companies, which typically exhibit high growth potential but also high risk. Over the past five years, the index has faced significant fluctuations, influenced by factors such as market sentiment, economic conditions, and the performance of individual companies.

Investors who put $50,000 into this index five years ago would find their investment reduced to about $48,000 today. This 4% loss underscores the challenges of investing in a market segment characterized by its speculative nature. While there are periods of growth and opportunity, the overall return has not compensated for the risk taken.

An Alternative: Canadian Mortgage Investment Corporations (MICs)

For investors seeking more predictable and stable returns, Canadian Mortgage Investment Corporations (MICs) present a compelling alternative. MICs pool capital from investors to fund residential and commercial mortgages, offering returns through interest payments. These returns are generally more consistent than the often unpredictable gains in equity markets.

Blue Pearl Mortgage Investment Corporation: A Case in Point

One standout in the MIC space is Blue Pearl Mortgage Investment Corporation. Blue Pearl has been providing investors with annual returns between 9% and 11%, distributed monthly. This steady income stream is particularly attractive in today’s low-interest-rate environment, where traditional fixed-income investments offer minimal yields.

Key Benefits of Investing in Blue Pearl MIC:

1. Consistent Returns: Blue Pearl has a track record of delivering reliable returns, significantly outperforming the S&P/TSX Venture Composite Index over the same period.

2. Monthly Income: Investors receive monthly payments, providing a regular income stream that can be particularly beneficial for those relying on investment income to meet their financial needs.

3. Lower Volatility: Unlike the stock market, where prices can swing wildly due to market sentiment and other factors, MICs like Blue Pearl offer more predictable performance.

4. Security: Investments in Blue Pearl are backed by real estate, providing a tangible asset base that can help protect against total loss.

Comparing the Investments

To illustrate the difference, let’s compare the outcomes of a $50,000 investment in the S&P/TSX Venture Composite Index versus Blue Pearl Mortgage Investment Corporation over the past five years.

1. S&P/TSX Venture Composite Index:

   • Initial Investment: $50,000

   • Value After 5 Years: ~$48,000

   • Annual Return: Approximately -0.8%

2. Blue Pearl Mortgage Investment Corporation:

   • Initial Investment: $50,000

   • Average Annual Return: 9% (conservative estimate)

   • Est. Value After 5 Years: ~$77,835 (with monthly compounding)

Conclusion

The comparison between the S&P/TSX Venture Composite Index and Blue Pearl Mortgage Investment Corporation highlights a stark contrast in investment outcomes. While the equity market offers the allure of high growth, it comes with substantial risk and volatility. In contrast, Blue Pearl MIC provides stable, high returns with the added benefit of monthly income, making it an attractive option for investors seeking reliable performance and lower risk.

As with any investment decision, it’s important to consider your financial goals, risk tolerance, and investment horizon. For those prioritizing stability and consistent returns, Blue Pearl Mortgage Investment Corporation represents a robust alternative to the unpredictability of the stock market.

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Disclosure Statement

The material in this article has been prepared by Blue Pearl Mortgage Investment Corporation (the “Company”) and represents general background information about Blue Pearl Mortgage Investment Corporation’s activities at the date of this article. This information is given in the summary form and does not purport to be complete. Information in this article, including forecast financial information, should not be considered as advice or a recommendation to investors or potential investors in relation to holding, purchasing, or selling securities or other financial products or instruments and does not consider your particular investment objectives, financial situation, or needs. Before acting on any information, you should consider the appropriateness of the information having regard to these matters, and any relevant offer document, and seek independent financial advice. All securities and financial product or instrument transactions involve risks, which include (among others) the risk of adverse or unanticipated market disruption, financial or political developments, and, in international transactions, currency (FX) risk. This article may contain forward-looking statements, including statements regarding our intent, belief, or current expectations with respect to Blue Pearl Mortgage Investment Corporation’s business operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions, and risk management practices. Readers are cautioned not to place undue reliance on these forward looking statements. Blue Pearl Mortgage Investment Corporation does not undertake any obligation to publicly release the result of any revisions to these forward-looking statements. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside Blue Pearl Mortgage Investment Corporation’s control.