Everything has gone from bad to worst in the most unexpected ways possible, especially in the areas of Real Estate and the current Stock Markets. Thanks to the Brexit situation, things seem discouraging now even more than ever.
In a time of such turmoil and economic chaos, investors are actively studying alternatives that would best define their long-term objectives. The question is, are there any good alternatives to what has commonly been the most popular investment schemes out there?
Where do investors turn when it comes to placing their funds in a safe and secure location, all while making decent to above average returns, in contrast to present market rates?
There are great alternatives that are worth exploring, especially now. The mere fact that the markets are going towards a downturn, with highly volatile conditions, it’s best to seek proper shelter for your money. Below are 3 reliable and safe alternatives that you should consider;
1. The Life Settlement Structures
Unlike the traditional way of investing your funds, life policies and portfolios grant investors the opportunity to cash out on a guaranteed exit, rather than a speculative guess regarding returns. The life insurance arena has been commonly used by quite a few hedge funds, in an attempt to hedge, in the case of non-performing assets in their existing portfolios.
Getting your hands on life policies, notably the senior ones, are not a laborious task. In fact, there are hundreds of settlement houses across the US and Canada that provide great policies and portfolios based on investor preferences. They typically range from $30,000 to upwards of $5 million.
The only notable downside is that you can’t finance the acquisition of life settlements unless otherwise, you’re using your current assets by way of leveraging the equity and borrowing off of it.
2. Corporate Debt Instruments (Bonds)
While people are remarkably familiar with the stock markets, the bond market is something that should be looked into as equally. Very few know the fact that the bond market itself is a whole lot bigger than the stock markets. Of course, the traditional thing would be to invest in stocks. However, what if you were given decent yields that uphold long-term perpetual value? Would you consider investing in bonds then?
Assuming that the average rate of bonds surpasses the 4 point mark, which is quite common in the corporate arena, would it not be a better alternative to stocks, who are merely speculative?
It’s true that bonds are in fact, a great way of overcoming inflation, fighting below standard yields, and are instruments that provide long-term benefits. Nonetheless, you should always ensure to do your research on the issuer to ensure that all considerations have been made in regards to the security of your investment as well as plausible exit strategies, should the company fail to meet its debt obligations when the time comes to maturity.
3. Private Money Loans by way of liens against properties
We’ve all heard of mortgages and private loans, but have we explored the aspect of actually being a lender instead of the borrower? Investors have always been eager to invest directly into Real Estate by borrowing, almost like a long-standing tradition.
Very few investors utilize the power of Real Estate as a means to create structured debt notes, which provide excellent above average rates of returns. When exploring private loans, it’s not uncommon to expect yields of 7.5% to 14%. In fact, most Private Loans go at the double digit, in any typical situation.
The borrowers expect to pay these rates as they know the qualification solely and mostly depends on the value of the asset, in this case, the property itself. Real Estate investors are actively seeking lenders that they can connect with to do combination deals for both short and long-term. It’s worth exploring and is much safer than gambling your money away.
In fact, the terms in which a private loan is structured is considerably favorable to the lender than the borrower. It’s not a very debatable situation, as you’ll have considerable equity to take, in exchange for a fraction of the money that you’ll be lending.
To conclude, the alternatives given above are worth analyzing as they’re deemed safer and more reliable overall. An investor is always asked to conduct his or her due diligence at the time of actually dwelling into the transaction, as everyone has their preferences.