Your money is your most precious asset.
Choosing how to properly invest that money to compound your wealth is a delicate, and sometimes risky, limbo that includes understanding terms, offerings, interest, and a whole lot of other factors that can be confusing and overwhelming.
We see it all the time at Tactical Wealth, which is why we came up with a risk-averse solution for investors with no need for immediate liquidity.
It’s called the Fixed Income Fund, and it’s designed to provide our investors with a stable, consistent income to go with peace of mind when it comes to their finances.
We issue or purchase a variety of mortgage and trust deed loans in areas with historically stable valuations and advantageous foreclosure laws to avoid potential bubbles and gain quick asset recovery in the event of a foreclosure or non-performing loan.
The steady flow of income provided by the fund is greater than that offered by typical annuities and bonds, and our investments are backed by an established contingency reserve and pooled funds to prevent against loss and loan defaults.
But, we did mention that investment comes with risk, right?
Sure, there could be times where the mortgage loans we purchased are underperforming, not performing, or being foreclosed on.
Sure, you are putting your money in the hands of someone else – albeit someone with 20 years of investing and market experience.
Sure, you may be choosing to invest your personal IRA, 401K, SEP, or other qualified account.
Sure, all of these are risks.
But we always take into account the safety of your income and principal with the Fixed Income Fund. Here are the ways we mitigate those risks:
- Compound interest: With the Fixed Income Fund, you can receive a substantially greater return by re-investing your income and allowing your earnings to compound over time.
- Reassurance In Death: Since the Fixed Income Fund is an illiquid investment, your beneficiaries will continue to receive the remaining interest payments specified in your terms, as well as a final principal payment at maturity. Sometimes, it may be possible to liquidate the investment and pay the principal to your beneficiaries early, though that option is always contingent on market variables.
- Lifespan: Our maturities vary from two to 30 years, each with fixed rates that will never change even as interest fluctuates. Our varying maturities and rates include:
- Two years at 1.66 percent
- Three years at 2.42 percent
- Five years at 3.37 percent
- Seven years at 3.85 percent
- 10 years at 4.75 percent
- 20 years at 5.27 percent
- 30 years at 5.75 percent
- No Fees: Your money is better spent with a Fixed Income fund because there are no investor fees, no management fees, and no transaction fees. We manage this because we always buy loans that meet our stringent requirements and provide a greater return than the amount we pay out. Furthermore, you’ll avoid the fees and hassles of paper checks (which can get lost in the mail) and receive your monthly payments via direct deposit.
- No Hassles: With the Fixed Income Fund, you’ll get a diversified portfolio and similar exposure as with direct real estate investment without having to deal with rental property tenants or the confusing and painful bank funding process.
- Secure Investments: Each of our investments are backed by all assets in the Fixed Income Fund, including the entire pool of mortgage and trust deeds as well as the investment capital of our manager. This allows us to diversify the risk of single loan defaults by purchasing holdings with varying property type and location, maturities, and borrower type.
- Targeted Investments: We aim to buy holdings with a maximum loan-to-value ratio of 70 percent, meaning the market value of the properties serving as collateral must exceed our loans by at least 30 percent. Additionally, we target loans backed by single family residences in markets with the most potential buyers and favorable foreclosure proceedings.
- Contingency Reserve: Finally, the Tactical Wealth Fixed Income Fund is backed by a contingency reserve to cover additional legal expenses in the event of non-performing loans, foreclosure proceedings, and more. This allows us to continue dishing out consistent monthly payments in the event of a loan default or other hiccup.
Now that we know how the Fixed Income Fund specifically addresses the many risks of investing, let’s compare it to other investments that claim to be risk-averse as well.
Risks Of Investing In Annuities
Investing in an annuity may seem like a solid fixed income option, but what are the risks?
With an annuity, you can receive dependable income throughout your life, but you can also become buried by the confusing jargon and fluctuating terms associated with them.
Typical annuities, such as fixed or variable annuities, are tied to insurance companies and the fluctuating interest rates.
Locking in an annuity during a time with unusually low interest rates means your investment will yield a smaller return than it would have when rates inevitably rise.
Additionally, as your investment is tied to the success of a particular insurance company, you run the risk of working with an insurance company that is headed towards failure. If that particular insurance company happens to go under, it will take your steady income and investment along with it.
Risks Of Investing In Bonds
Investing in government or corporate bonds also carries a great amount of risk.
For one, you’re again tied to the fluctuating market interest rates. Though in this case, when interest rates rise, the price of bonds tends to fall, and vice versa.
This can mean when interest rates are higher, you’re purchasing a bond that is below its average value and ultimately get a smaller return on investment.
Additionally, if you choose to reinvest in a bond, you may end up investing at a lower rate than your previous bond was earning.
You’re also running the risk of locking in a rate of return that doesn’t account for inflation.
Finally, since you’re often purchasing these bonds from corporations, your investment is not fully guaranteed by the faith and credit of the U.S. government.
With these bonds, you run the risk of default without a contingency reserve to back you up, which can result in a loss of money.
If you’re a risk-averse, accredited investor looking for peace of mind and a stable, reliable income, contact Tactical Wealth today.