When you buy structured settlements with this thought in your brains, this instrument becomes rather a tool to manage your finances, than a profitable investment. The management idea is not bad, because the structured settlements are safe investments. In most cases the court decides about the launch of the settlements, which means that it is not so simple to buy structured settlements as you may imagine. The court decision is always needed.
1. The Periodic Incomes.
Most structured settlement plans offer a series of the periodic payments rather than one lump amount. This looks a nice system but the financial risk increases also, because the future payments include always something surprising, an interest rate hike, for instance. On the other hand a receiver can get better profit from some other target.
2. You Cannot Borrow Against The Future Payments.
When you buy structured settlements you have to keep the schedule as such. It is not possible to use it as a guarantee to the loan. The idea is to protect the program and to keep the original idea. But the investment forms a jail and the only solution to release the money is to sell the program.
3. How About ROI?
ROI, or return on investment, can be good or bad depending on many things. When you buy structured settlements you know, what is the purchase price and how much are the periodic payments and when they come. What you do not know is the interest rate level during that period. If the inflation is high during the payment period, it will decrease the real profit every year.
4. Set Your Targets Correctly.
The settlements are meant to bring a financial security to the receiver, not to maximize the profit. But it offers also the profit potential as an investment, if the deal will be handled correctly and if there is enough luck in the process.
5. How To Get A Good Profit?
When you buy settlements you have to remember that the settlement is like all investment instruments. The value follows very much the general economic circumstances and the sellers motive to sell. If you succeed to buy settlements during a recession and if the seller is known to be in an urgent situation, the chance is that you can get the settlement with a discount price.
This is important thinking the future profit potential. The secret to avoid the bad surprises is to know all the possible details in advance. If you cannot make this calculation by yourself, you better turn to the professional person, who can be the broker, banker or other specialist.
