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10
Strategies: An Overview
Fast Profits in
Hard Times will teach you everything you need
to know and give you specific resources (websites,
toll-free numbers, etc) to implement the following 10
strategies:
1. Invest in Tax Liens
Buy liens placed on properties by municipalities because
owners have fallen behind in paying their property
taxes. Then, when the property owners pay what they owe
to the municipalities, receive not only a return of your
principal but also a penalty interest rate set by the
municipality, typically in the range of 8% to 25%. If
the property owner defaults altogether, take possession
of the property for a fraction of its real value: the
sum of the back taxes you've already advanced. You can
then sell the property, even a bit below its market
value, for a huge profit.
2. Buy Real Estate
Below Market Value
Identify real estate sellers who are willing to accept
less than their property's full market value for a
variety of reasons. Then resell the property immediately
at a profit, rehab it, rent it out, or even live in it
yourself, all with the built-in financial cushion of
having purchased the property for far less than it is
truly worth.
3. Invest in Income Trusts and Master Limited
Partnerships
Earn high yields of 8% to 13% by investing in trusts
that extract or transport natural resources such as oil,
gas, coal, or timber. Such trusts pass a large amount of
their earnings directly to investors through monthly
dividends. Depending on the trust or MLP, some of the
distributions may be considered a tax-free return of
capital, boosting your after-tax return even more.
4. Invest in
High-Yield Stocks
Invest in stocks with stable businesses that pay
dividend yields of 5% to 15% or more. Some industries
offering such high yields include electric utilities,
oil tankers, and real estate investment trusts, and
several broad-based closed-end mutual funds. This is a
way to make your capital compound with very little risk
when you reinvest the dividends or to boost the income
you live on if you take the dividends in cash.
5. Enroll in Dividend Reinvestment Plans
Invest in companies that offer Dividend Reinvestment
Plans, known as DRIPS, which allow you to use dividends
to purchase shares directly and thus bypass brokerage
fees. Automatically reinvest dividends back into further
stock purchases, thereby compounding your portfolio's
assets over time. Several companies offer discount
DRIPS, meaning that you get an additional 2% to 5% bonus
every time you reinvest dividends, compounding your
return even more at no additional cost to you. So if you
get $100 in dividends, you receive $105 worth of stock
when you enroll in a 5% discount DRIP.
6. Buy High-Yielding Bonds
Buy bonds of companies, municipalities, or foreign
governments, either individually or through open and
closed-end funds, which pay yields of 5% to 12%. In
addition to the high rate of interest, you will receive
the return of your principal when the bond matures.
There are many types of hybrid bonds available in
today's market with catchy names like STRIDES, ELKS,
MITTS and HITS which offer guaranteed return of
principal, high yields and potential bonuses based on
how the underlying instruments perform.
7. Use Put and Call
Options
Rather than buying and selling actual stocks or stock
indexes, you can, for a fraction of the cost, trade
rights to buy and sell those stocks or stock indexes at
specific prices within a specified period of time up to
two years into the future. This form of leveraged
trading allows for far greater gains but also runs the
risk of far greater losses than normal stock investing.
It is therefore imperative to follow careful strategies
that limit risk while optimizing profits.
8. Profit from
Foreign Exchange Trading
Trade one currency against another currency, on the
expectation that the currency you've bought will gain in
value relative to the one you sold. This provides a
convenient way to profit from the decline of the US
dollar against most major foreign currencies.
9. Invest in and
Broker Cash Flow Opportunities
Identify people and/or businesses willing to sell future
receivables at a significant discount in exchange for
ready cash. Then either buy the payments yourself or
serve as a broker for a third party, typically a large
financial company, which provides the funds. For
example, you can broker or buy cash flows from lottery
winners, lawsuit winners, mortgage notes or
reimbursements due to a doctor's office from insurance
companies or Medicare.
10. Set Up Passive
Income Strategies
Set up some kind of system that needs minimal ongoing
management but continues to produce significant cash
flow far into the future. A few examples include:
-
placing vending machines in
high-traffic locations to collect passive income
whenever customers make purchases
-
placing ATMs or point-of-sale
(credit/debit/card swipe) machines in high sales
volume locations to earn small fees paid by
merchants whenever customers use the machines
-
Buy high-quality timeshares in
desirable locations and seasons and rent them out
over the internet to earn substantial rental income
Copyright 2008 Jordan E. Goodman
Jordan
E. Goodman is a former Money magazine
journalist and the author of several bestselling books,
including Everyone's Money Book, The Dictionary of
Finance and Investment Terms, and Master Your Money
Type. He provides financial advice to millions of people
each month through regular appearances on radio call-in
and TV shows and through his seminars to corporate,
association, and university audiences. He has been a
regular contributor to NBC News at Sunrise, The
Marketplace Morning Report on Public Radio, and
many other shows. He hosts a popular financial resources
Web site,
www.moneyanswers.com, and is the host of The Money
Answers Show on the VoiceAmerica Radio Network at
www.voiceamerica.com. You can find out more about
this book at
www.fastprofitsinhardtimes.com.
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