David Kirkpatrick

June 16, 2010

Want to shake up your investment ideas?

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 5:56 pm

Check out this article on six, well different, approaches to investment.

From the link, number one:

You should hold more in stocks when you’re young, and less when you’re old. That’s the conventional wisdom. After all, stocks tend to do well in the long run but are volatile in the short term. But when you’re in your twenties or thirties and have the longest to run, you might have only a few thousand bucks in the market. By the time you’re in your fifties and sixties, you’ll have the most money but will want to risk less of it.

In their book “Lifecycle Investing,” Yale economists Ian Ayres and Barry Nalebuff propose an audacious solution: Increase your stock position with borrowed money when you’re young. You can do that with a margin loan from a broker. Or, as Ayres and Nalebuff prefer, with LEAPS, which are options to buy an index like the S&P 500 in the future at a low price. (You win if stocks beat that price plus your cost.) Either way, your top allocation to stocks should be 200% of assets, meaning every $1 of your own money is effectively matched by another $1 borrowed.

November 11, 2009

A reverse mortgage primer

Filed under: Business — Tags: , , , — David Kirkpatrick @ 4:54 pm

They aren’t for everyone, but if you have reverse mortgage questions this article from Kiplinger is a pretty good starting point.

From the link:

What is a reverse mortgage? It’s a loan on your house that lets you tap your home’s equity. Like a cash advance, a bank fronts you the money—either as a lump sum, a line of credit or monthly draws—and you have to repay it eventually, with interest.

Unlike a traditional mortgage, you don’t have to repay the loan during the term of the reverse mortgage. Instead, you pay it off all at once at the end of the loan. There are no income or credit qualifications, but homeowners must be 62 or older.

You retain title and ownership of your house. You are still responsible for paying the property taxes and the costs of insurance and repairs. If you still have a regular mortgage, you either have to pay it off before taking the reverse mortgage or use part of the proceeds from the reverse mortgage to retire it.

October 29, 2009

Pros and cons for trust deed investments

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 3:25 am

Are you looking for an investment vehicle combining strong return-on-investment and still considered a secure bet?  Trust deed investments may be the answer. Trust deed investments have the potential to offer high returns relatively safely, but this investment vehicle isn’t for everyone. Like with any investment you should take the time to learn about the pros and cons of trust deed investment.

Trust deed investments come with one major entry on the con side of the balance sheet — very little liquidity. If you need your investment money at a certain time or on short notice trust deed investments are not for you. Another potential con is you might end up owning the property behind your trust deed investment.

The pro side has its one major entry as well, and it’s pretty strong — trust deed investments are one of the safest high-yield investment vehicles out there. With trust deed investments your investment is secured by a deed of trust against a property owned by the borrower of your money. A trust deed investment allows you put money into real estate through an intermediary and typically you only deal with the outlay and return aspect of investing in property.

From the link, eight points from Federal Home Loans Corporation on trust deed investments:

Having provided all the pitfalls and negatives, you should not lose your money in trust deeds. Let’s recap:

  1. Keep your money in the bank if you need it.
  2. You may end up owning the property.
  3. Keep your broker honest; use the title company.
  4. Demand paperwork in your name.
  5. Understand how value is determined.
  6. Invest in first trust deeds only.
  7. Be aware of the occasional requirement for the temporary investment of additional funds.
  8. Adjust with the market.

October 21, 2009

A trust deed investment primer

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 1:45 pm

Trust deed investments can offer high returns relatively safety, but this investment vehicle isn’t for everyone. Like with any investment you should take the time to learn about the pros and cons of trust deed investment. Understanding the risks involved and the upside to any investment should be a major part of your investment strategy.

With trust deed investments your investment is secured by a deed of trust against a property owned by the borrower of your money. This promissory note involves risk to your investment, defines a time period for the return of your investment and is not covered by any federal insurance.

If the borrower default on this promissory note you will acquire the property through foreclosure. This could be a pro or a con depending on your view of directly owning and investing in real estate. Before a foreclosure you are buffered from direct real estate investment by the trustee of your investment.

Here are some points to consider with trust deed investment:

  • Trust deed investments are high-yield and and relatively safe, but they aren’t liquid. Don’t make trust deed investments a part of your overall portfolio if you need access to your money at a specific time.
  • Be sure to use a title company, and not your broker, to deposit your investment and receive your return when the loan is paid off. Allowing your broker to handle the funds make trust deed investment much more risky than necessary.
  • Appraisal shouldn’t be the only method you use to value a property, but it is a major tool in your valuation toolbox. An appraisal will give you a wealth of important information about the property.
  • Only invest in first trust deeds. You should never put money in a second, or even more junior, position in a trust deed investment.

September 16, 2009

Worried about retirement?

Filed under: Business — Tags: , , , — David Kirkpatrick @ 11:54 pm

This CNNMoney story is for you.

From the link:

3. Worry less

What if you just can’t save that much?

If your budget is tight today and you just can’t find another dime to set aside — well, you’re not alone. But you should resist the urge to become really aggressive to make up for what you’ve lost. You probably have some other arrows in your quiver. Just one of the following can go a long way toward getting you to a comfortable retirement: