A Safe Way To Secure Your Retirement
Investing in real estate (via trust deeds) for your retirement may serve as a means to diversify your retirement portfolio to hedge against the cyclical changes in the stock market, economy and bank and government-based investments.
Trust deeds (TD’s) secured by tangible real property, when professionally underwritten and managed, have become a good investment alternative for the income-producing portion of an investment portfolio.
Fixed Income Security
A Trust Deed Investment is considered to be a fixed income security. Fixed income investments pay interest at specified times in fixed amounts, and are usually issued by a corporation, municipality, or government sponsored agency.
There are four primary reasons investors may want to include fixed income investments in their portfolio:
| 1. |
Regular Income - Fixed income investments provide a stable and regular stream of income. |
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| 2. |
Diversification - Fixed income investments are essential to the performance of an individual investor's portfolio. |
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| 3. |
Predictability - Most fixed-income investments also provide a predictable stream of income. |
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| 4. |
Tax Advantage - The interest income generated by some fixed income investments are tax deferred or tax exempt from federal and/or state income taxes. |
Income
Fixed-income investments involve loaning money for a period of time in exchange for periodic interest. A Trust Deed Investment can generate additional income to supplement existing income sources.
Diversification
Trust Deed investing offers many investors, particularly retirees - another method of diversification to help reduce volatility in their portfolio and a way to generate additional income.
Historically, trust deeds have outperformed cash investments (bank deposits, CDs, money market instruments and US Treasury bills), and exhibited less volatility than stocks, although stocks and mutual funds can offer high returns, they have greater risks. Furthermore, the return on TD’s has often offset the negative return on stocks during periods of market downturn. As a result, adding TD investments to an all-stock portfolio generally increase’s overall return and lowers the overall risk of your portfolio.
| |
Trust Deeds |
CDs |
Stocks |
Municipal Bonds |
| Interest |
8-12% |
3-5% |
Variable |
4-5% |
| Risk |
Low |
Low |
Moderate-High |
Low-Moderate |
| Secured By |
Real Estate |
FDIC |
Paper |
Municipalities |
| Liquidity |
Yes w/ Penallty |
Yes w/ Penallty |
Yes |
Yes |
| Commissions |
None |
None |
Always |
Always |
Predictability
Most fixed-income investments also provide a predictable stream of income. This can be an advantage for current or near retirees who seek regular income to supplement a pension and/or Social Security.
Tax Advantage
The interest income generated by some fixed income investments are tax deferred or tax exempt from federal and/or state income taxes. The Tax-Exempt Fixed Income Investment Model invests your IRA, family trust, or pension funds in Secured Loans (Trust Deeds / Mortgage Notes).
Trust deed investing is appropriate if you are an investor interested in protecting the amount of money you invest and you want some growth potential to hedge against inflation or build a larger nest egg, safely, in a relatively shorter period of time. |
