Everything You Need to Know Before Investing a Residential Mortgage-Backed Security

If you're interested in making more money, investing can be a great strategy to use. If you have additional…
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If you're interested in making more money, investing can be a great strategy to use. If you have additional money that would otherwise be sitting in a savings account, you may be able to get a much better rate of return by investing. That being said, you're right to be wary about different markets, because different sorts of securities and investment vehicles can offer you different kinds of returns. If you're interested in investing in a residential mortgage backed security, here's what you should keep in mind before pulling the trigger.

Choosing your investments carefully is a vital component of investing smartly. As such, it's important to think about your goals and how risky you'd like to be as an investor. Different kinds of investments will offer different kinds of returns, but not every person wants to take the same route when investing their money. For example, investing in government bonds or a high-interest savings account isn't likely to make you more than 3 or 4 percent on the dollar, but these sorts of investments are generally low-risk and can protect you against some of your riskier prospects.

Higher risk investments are typically known as growth investments. A growth investment could be any number of things, such as an investment in property or in shares of a business. While these sorts of investment vehicles tend to be more volatile than defensive investments like bonds, your rate of return could be doubled or even tripled if you choose wisely and get lucky. It's important to think about these pros and cons in relation to how much you want your money to grow and what you ultimately want to do in life.

The residential mortgage backed securities market, also known as RMBS, is an exciting option for many investors. This is because this type of investing is usually only offered to professional or institutional investors. However, companies like Firstmac offer investment funds featuring RMBS investment options, such as their High Lives bond fund which is backed by homes around Australia. This sort of access has a wide range of benefits for individual investors. For starters, a business like Firstmac has decades of expertise in the residential mortgage backed securities market. Their bonds are secured against properties in the Australian housing market, only featuring properties that have already been constructed.

This can offer you a much more secure way to get higher returns than you'd find in a traditional bond or savings account, offering over 5 percent. Firstmac offers other benefits aside from access to investing in RMBS, too. For example, when you invest with Firstmac in an RMBS, you don't need to pay any fees to enter into the investment or leave it. You also only need to start investing at an initial amount of $10,000 and up in increments of $1,000. Best of all for many investors, distributions from your investment are paid out each month within as little as ten business days, making investing in RMBS through Firstmac a timely choice, too.

As you can see, how to invest your money ultimately comes down to personal preference. Some people may be very risk-averse, and, while they may not make as much on their money, they won't lose as much either. On the contrary, there are some who may be too bold in their investing, which could put their financial stability at risk.

Investing in residential mortgage-backed securities can be a way to gain more from your investment while still protecting your money. If you're willing to take a moderate level of risk for a better return than a savings account can offer, mortgage-backed securities are well worth exploring with your financial planner.