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Protect Your Nest Egg - Multiply Your Income

June 20, 2012 | Comments: 0 | Views: 161

Here is the problem

If you are counting on the interest earned from you savings account to live on, or to supplement your other income, or to help fund your retirement account, you are now, and probably have been, very, vary disappointed. If your financial plan depends on earning 6% to 7% interest, and you are now earning 1% to 2%, you had better start looking for a new investing tool. What worked for you yesterday is not working for you today.

Pension plans are hurting, Social Security is hurting, and the individual saver is hurting.

As shown below, the interest that banks pay for your saving today is an embarrassment; it is inadequate and it is unfair:

1-year CD 1.05% ($500 min. balance) 3-year CD 1.35% ($1,000 min. balance) 5-year CD 1.85% ($500 min. balance)

Here is a solution Private party promissory notes can be a great investing tool for the conservative saver seeking a 6% to 7% low-risk investment. Promissory notes are not a new invention. They were in use during biblical times; they have been around for hundreds of years. In fact, they were in popular use by farmers, merchants, and investors before commercial banking evolved. They are an overlooked investing tool.

What is a promissory note? Promissory Note Defined: A promissory note is a financial instrument. Its investment value is based upon three factors: 1. Ability to produce monetary returns; 2. Ability to be marketable; 3. Ability to be self-liquidating. It is an unconditional promise to pay a fixed amount of money, with or without interest; it is payable on demand, or at a definite time; and it does not state any other undertaking or duty in addition to the payment of money.

Where do I find good promissory notes? Essentially, there are two main sources. The first option is to create a promissory a note investment by using money from your savings account to originate a loan that is secured by promissory notes. The funds that you use can come from your bank account or from your self-directed IRA account. When you create a note investment by originating a loan, you can tailor the interest rate, the repayment terms, and the collateral security to your satisfaction. This approach has advantages and disadvantages that you must weigh and evaluate. If you are not an experienced note investor, then in the beginning you should get some professional mentoring or advice from an experienced, expert specialist. No one is born knowing how to properly invest in notes; everyone has to start as a beginner and learn.

The second option is to buy into, or invest in, an existing promissory note. All of the considerations applying to originating a loan apply equally to buying into an existing note. Just as every investment has its own advantages and disadvantages, so does this approach. Once again, to avoid costly mistakes, it is advisable to work with an expert advisor or mentor at the beginning of your note investing career. The money spent for expert advice is like paying an insurance premium to protect against suffering a catastrophic loss. Your goal is to avoid making costly and unnecessary mistakes with your nest egg.

What should an expert advisor do for me?

Your expert advisor should: • have an understanding of your financial goals • have an understanding of your financial situation • have an understanding of your financial skills and abilities • have an understanding of your available time for investment matters • have hands-on training and experience in the promissory note business • have an understanding of the laws and rules applying to the note business • have the ability to disagree with you in a helpful, honest way • have the ability to explain to you the risks and benefits of a note deal • have the time and motivation to give you first-class service • have the ability to work with your attorney, accountant and note broker

Summing it up The current low bank interest rates appear to be here to stay-at least for the foreseeable future. That means that you should hunt for higher interest rate investments now so that your long-term investing plans stay on track. You probably cannot hit your investing target if your rate of return is remains at 1% to 2%; you probably need 6% to 7% as a minimum. Savers and investors who do not seek higher returns will suffer financially over time.

Promissory note investments are one investing vehicle that can safely provide 6% to 7% for you along with reasonable predictability and safety.

If you do not have note investing experience, you should hire an expert to keep your nest egg safe.

• Investing is simple, it's just not easy.

• When the foundation fails, all fails.

Lawrence Tepper specializes in:

Promissory Note Appraisal & Valuation--and LLC Valuation and Appraisal

Expert Consulting Services

EDUCATION AND TRAINING

Law Degree /Accounting Minor University of Denver Colorado Real Estate Broker-- Promissory Notes Specialization Certified Commercial Investment Member From National Assoc. Realtors (CCIM)

PRACTICAL EXPERIENCE 35 + years of appraisal and valuation for Attorneys, CPA's, Estates, Trusts, Administrators, and Financial-Investment Advisors.

http://promissorynoteappraisers.com/

Source: EzineArticles
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