How Passive Could Your Retirement Income Get When You Invest in Trust Deeds

invest in trust deeds
invest in trust deeds

It is every investor’s dream to receive passive income especially if this income is going to be spent for the retirement of the person. As a retirement investor, the funds that you will use for your investment is not your personal savings but the money you contributed into your retirement account, like the Solo 401k for the self employed and IRA or traditional 401k for employed workers. For the Solo 401k and self directed IRAs, the retirement account holder has the ability to invest in trust deeds or other real estate investment using his or her funds unlike in traditional 401k and IRAs where investment is limited to stocks and mutual funds.

Many investors would agree that investing in trust deeds allows them to earn passive income. This is because when you invest in trust deeds, you lend a borrower an amount of money which is typically with a value of around 65% of the asset that the borrower used as collateral for the loan. The amount of the loan earns a certain interest rate which is received by the lender every month on top of the agreed installment amount from the principal value of the loan. Imagine how less effort it would be for an investor to earn on a regular basis through this kind of real estate investment.

Earn passive income and secure your retirement when you invest in trust deeds

All kinds of investment involves risks and the risk involved in trust deeds investing is very minimal compared to that of the stock market in which you can lose your whole initial investment. A trust deed is supported by a promissory note signed by the borrower. This is a very strong legal document you can use to file lawsuit against the borrower should he or she fail to fulfill his or her obligation, but before taking matters into court, a trustee is there to keep things in balance and helps you recover your investment through foreclosure of the loan and sending the property into auction. In most cases, the bid is always higher than the debt. When the property gets sold, the remaining loan and other fees will be paid.

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