Author: David Williams

What is a structured settlement?

Recent developments have seen people result to use of structured settlement to resolve a personal injury lawsuit as opposed to the previous lump sum settlement process. This begs the question; what is a structured settlement? And yes, what benefits does it bring to the plaintiff? These questions are bound to pop up as we address this topic. A structured settlement is a negotiated insurance or financial arrangement where the claimant agrees to receive periodic payments as compensation rather than getting all the money at once. This guarantees a stream of income for the claimant within the agreed time. Although it might be offered by the defendant or demanded by the plaintiff, is it crucial that both parties arrive at an agreement. This entire process is monitored by a consultant who then uses the money to purchase an insurance cover for the injured individual. After that, the insurance company makes periodic payments to the insured.

How to sell a structured settlement

Selling of structured settlements in exchange for a lump sum is a trend that has been on the rise in the recent days. While periodic payments look like an awesome idea, some people find it hard to keep waiting for the next payment. This has pushed people to sell their structured settlements to companies which are established purposely for that. Although there are numerous reasons why people opt to sell their structured settlements, the common reasons people have cited include the need to repay college loans, the need to start a business and sometimes a desire to clear medical expenses.

How do you go about the selling process? To sell your structured settlement, all you have to do is get in touch with a reliable and well-established company which deals with buying of structured settlements. You need to be careful while selling your structured settlement to avoid getting engulfed into a financial crisis after you have already sold it out. For that reason, you need to ensure that you sell it to a well established and reliable company. Basically, the process involves tons of paperwork after which a judge is supposed to approve the sale and then you get your cash. That’s how it goes! And yes, you can either sell the entire structured settlement or just sell a portion of it.

How to choose a reliable structured settlement company:

Given their high numbers, getting a reliable structured settlement company is quite a task. This is because one needs to be careful so that they do not lose their money to a scam. For your own safety, you need to ensure that you employ services or a representative. And yes, the entire process needs to be taken to the court for a judge to approve it. Let’s look at some factors you need to consider:

1. Their reputation: This is a really crucial aspect that needs to be looked at keenly. A company’s reputation will give you heads up on what to expect once you start working with them. If you discover that the company has had a bad reputation, it is advisable you avoid them like a plague. After all, reputation is a clear reflection of what a company stands for and how it operates.
2. How long have they been in business: You need to also consider the amount of time this company has been in this business. This form a good basis for you to analyze their performance and form a solid and accurate opinion about the quality of services they offer.
3. The amount of time they take to release payment: Time of the essence; there is no doubt about that. After all, the reason why one would want to sell their structured settlement is because they have an urgent need for money. For that reason, you need to ensure that you work with a company that does not take ages to effect the payment.

• JG Wentworth: With 25 years in this business, this company has proven quite reliable. If client feedback is anything to go by, it is safe to say that they have been able to build a good reputation throughout the years.
• Olive Branch Funding: This is yet another company whose reputation speaks volumes. Having been on the market for quite some time, Olive Branch Funding is a trusted structured Settlement Company.
• SenecaOne: SenecaOne is also a great company whose impressive services have placed it at the top of the market. If you are looking for a reliable company, it is one of them.

In a nutshell, a structured settlement is a daunting affair that requires utmost care. Armed with this information, I believe that you are fully equipped to make the right decisions.…

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Annuities can be a valuable investment if you choose the right type of policy. They can provide you with a source of income in the future that you don’t have to work for. Typically, an annuity is defined as a type of financial investment which pays out a dividend after a period. There are several types of annuities which you may consider at different points in your life. They include Fixed Annuity, Immediate annuity, Equity Indexed Annuity, Deferred Annuity, Variable Annuity and Roth IRA.

Retirement annuities are some of the more common types of annuities. Pension plans often incorporate retirement annuities. The benefit of a retirement annuity is that when you retire, you are still effectively earning a salary. The difference is that you no longer need to work for it. Rather, it is paid out from your annuity investment. How a retirement annuity works is that while you are working, you will invest money on a monthly basis in policy. When the time comes for you to retire, the policy matures, and you get a monthly annuity. The only drawback to retirement annuities is that many people forget to factor in the time value of money. This means that even if you invest what you think will be enough to cover your monthly expenses, with the rising cost of living it may not be enough to meet your financial needs in 20 or 30 years. Choosing a retirement annuity, therefore, requires careful consideration, and this is where a broker or financial advisor can offer valuable advice.

Fixed Annuities Are a Stable Investment
In terms of investments, fixed annuities are some of the simplest types. With a fixed annuity, you choose a period for your policy; it could be 10, 20 or 30 years. For the duration of the investment, you will pay a monthly premium into the policy. On your investment, you will usually earn a fixed amount of interest. When the policy matures, you will receive an annuity that is a guaranteed amount. While it is beneficial to know exactly how much you will be earning, the disadvantage is that you will not benefit from market gains. Also if you have not invested sufficient funds, the annuity you receive may well fall short of meeting your financial needs when the policy matures.

Taking Advantage of Selling Annuity Payments

If you want to seek out the best possible interest rate and take advantage of the markets when selling annuity payments, then consider a variable annuity type of investment. While the premium you may pay in on a monthly basis may be the same, the interest rate you receive may change over time. Often, you can also increase your contributions if you want to add more value to your investment. The payout you receive from a variable annuity will be directly linked to the performance of the investment and the current markets. If the markets are buoyant, then your investment will grow favorably compared to a fixed annuity investment; however, if the markets crash you could end up losing money on your investment. You, therefore, need to invest wisely when choosing variable annuities.

What to Consider When Looking at Annuities

Never rush into an annuity investment. Always consult with a reputable financial advisor and consider various policies and options available to you. Take your time to understand more about each type of policy and consider which one will suit you at your current point in life. For a young executive in his 20s, this is the ideal time to start investing. It could be in a retirement annuity or some other form of an annuity. It doesn’t matter which. What is important is that you will be building a nest egg for your future. People in their 30s or 40s will probably have to invest larger amounts into a policy to make it work for them. Even so, you will still be saving towards your future. Understand the options available to you. For resource material, you can turn to financial magazines and newspapers. Online you will also be able to find some valuable resources. Often, financial advisors publish special reports about a certain type of investments. No matter where you live, there are probably only a handful of reputable financial institutions.
People can decide to sell their annuities due to several reasons. It can be done by selling to other investors, going to a company, or getting a loan.…

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I prefer my portfolio to be self-directed.  Paying a financial planner 2% to 3% for something I can do just as well is a waste of money.  A 401k account has a limited number of funds in a plan but there are many more choices with an IRA at a bank or brokerage.  If I have an IRA account I will invest my money in a group of funds through E*Trade, Scottrade or TD Ameritrade following my own strategy defined in the next chapter.  At least with these discount brokers you do not have to pay an extra 2% to 3% investment broker/banker fee.  You will still pay the mutual fund fees which are interwoven within the funds themselves but you will not pay extra for the “expertise” of a financial planner.

Here is the summary of my investment strategy:

–         I try to maximize my contribution to my 401k account, which in 2016 is $18,000.  I am dollar-cost-averaging into the stock market with my periodic contributions from my monthly annuity payments. Tip: If you have an annuity you want to sell, reach out to Washington Accord.

–         I have my money in mutual funds not individual stocks. I have a moderately aggressive risk tolerance which means if I lost 10% to 60% of my money, I will not panic and withdraw the depreciated balance.  I will ride the tide and wait it out until the stock market recovers which it inevitably does.  I am more than 10 years away from retirement so my asset allocation, which I think is a balanced portfolio and diversified enough is 1/8 of my balance into each of these categories of mutual funds:  1) Large-Cap Growth, 2) Large-Cap Value, 3) Mid-Cap Growth, 4) Mid-Cap Value, 5) Small-Cap Growth, 6) Small-Cap Value, 7) Balanced and 8) Bonds (Government or AA and AAA only). I selected each category from the following family of funds: Vanguard, T. Rowe Price, Fidelity, Transamerica, John Hancock, Janus, Oppenheimer, Hartford, Invesco, Dreyfus, BlackRock, Janus, Franklin Templeton, Eaton Vance and American Century. The following website is a good place to start to find out the best long-term performers in some of the most popular mutual fund categories:

http://money.usnews.com/funds.

Example of Allocation

$500,000 Portfolio, $62,500 in each of these funds:

Large Growth

Vanguard PRIMECAP Fund Adm (VPMAX)

Large Value

American Funds Mutual Fund R6 (RMFGX)

Mid-Cap Growth

Janus Enterprise N (JDMNX)

Mid-Cap Value

American Century NT MdCap Val Instl (ACLMX)

Small Cap Growth

Janus Triton Fund D (JANIX)

Small Cap Value

Vanguard Small-Cap Value Index Fd (VISVX)

Balanced Fund

American Funds American Balanced Fund A (ABALX)

Bond Fund

Vanguard LT Govt Bond Index Inst (VLGIX)

Please keep in mind that the above allocation is only an example.  The funds shown above are not specifically recommended.  Moreover, the current funds’ performance may be drastically different from their performance on the date of publication of this book.  Do your due diligence before acting on any information obtained from this book.

–         I automatically rebalance my portfolio at the end of each quarter.

Resources:

https://en.wikipedia.org/wiki/Annuity

https://www.washingtonaccord.org/annuities/…

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Some investors may have cringed just a bit at the idea of an immutable lockbox. A lockbox clearly makes sense, but it’s a little boring. If you want investing to be fun and dream about the thrill of owning a 10-bagger stock (don’t worry if you don’t know what that means), by all means take a shot. But do so with only 5% to 15% of your savings in a “sandbox.” The sandbox is where you can have some responsible fun, make “bets” on individual stocks or sectors, and truly manage your own money.

In addition to being a bit more exciting than the “buy it and forget it” plan, the sandbox serves two extremely important functions:

1. It is educational. A sandbox provides a reason to learn a lot more about investing. If you think that IBM might be a great buy right now, you are probably going to want to know how to value the company, whether it looks cheap or expensive on various metrics, how management is doing running the company, etc. Looking for answers to questions like these can be a hugely educational process that will make you into a more confident and informed investor better able to stick to a plan. You might find that you hate thinking about investing, and that is fine. Nothing is stopping you from investing your sandbox in ETFs or mutual funds, or closing it altogether. But you also might turn out to be one of those 2-3% of investors who are capable of consistently beating the market, and it would be a shame to let those talents go to waste.

1. It provides a release valve for our impulse to trade more often than is healthy. As mentioned earlier, one of the reasons for a lockbox is that investors have a checkered history with the market. “Follow the herd” thinking has caused many to run headlong into technology stocks, commodities, housing, or even tulips (search for Dutch tulip mania), at the exact wrong time. But the lockbox is only going to be as strong as the will of the investor that created it. And there will come a time, no matter how strong the will, that every individual investor will see other people getting rich and want to jump into the fray, or will see his or her wealth disappearing and just want to sell everything. The sandbox lets you make a compromise with yourself-if you really think that “pets.com” is going to be the next Walmart, then by all means, put a little of your sandbox account into it, but don’t endanger your retirement by investing all of your assets in it.

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