My investment experience has not expanded much in the traditional sense since getting involved in the self-directed process. I still wonder about my mutual funds, and begrudgingly review my statements because, frankly, the stock market is not my cup of tea. But I’m motivated from a different perspective now that I have taken control of my financial future. I know that I can hold my own in making informed decisions. In particular, I can make non-traditional investments as an alternative and diversify my portfolio.
So what’s a non-traditional investment?
I had to do my research, but it didn’t take me long to figure out that non-traditional investments are much easier for me to research than stocks. For the most part, I already had a beginner’s knowledge. I worked in the title and escrow industry for twenty-five years, so I understand real estate. I know that gold bullion is an investment I can feel and touch. I’ve learned that I can pay delinquent property taxes and earn interest over a period of time until the property owner pays the taxes and penalties. If the owner doesn’t, I could end up with that piece of property. Those are just a few possibilities I have considered for my personal portfolio.
I didn’t know until recently how many non-traditional investments I can make with my IRA. All I need to do is move my IRA to a self-directing custodian that is willing to hold these non-traditional assets for my IRA. Voila, I am on the road to savvy, informed investing.
And that is just what I did. I rolled a portion of my portfolio to The Provident Group, a self-directed custodian, and made my first investment a few months ago. I chose an investment called Senior Life Settlements. After I did my homework, I determined this is a “safe harbor” buy-and-hold investment that fits my retirement investment criteria.
Here’s how it works. A retiree holding a large life insurance policy decides to sell it. In essence, this investment allows the policy holder to turn a death benefit into a “living benefit.” I know, for those of you who are hearing about this for the first time, this may sound a bit morbid. But the senior wishes to sell and is seeking a buyer because they have a strong need. Maybe the retiree wants to enhance his or her lifestyle. In that case, we’re helping the policy holder meet a goal.
Why haven’t you heard about this investment? Well, most investment brokerage houses do not hold non-traditional assets such as these. So they will not promote this investment. However, and here is a real kicker, these same investment brokerages have been some of the biggest purchasers of Life Settlements for the past twenty years. In fact, they were the only investors because no one offered fractional ownership in these multi-million dollar policies. About four years ago, Life Partners, a company that pioneered Life Settlements in the early 1990s, decided to offer fractional interests in these policies to investors like you and me. We can join hundreds of other investors and purchase a share in these policies. LPI
Why did I choose this investment? I can make an investment and know exactly how much I’ll receive when the policy matures. If I invest $10,000 in a policy I know it will return a specified amount at maturity because that payout is determined at the time I make the investment. The only thing I won’t know is the policy’s maturity date.
My return on investment is determined by two factors: 1) how long I have to hold that policy and 2) whether I have to pay a premium call over and above what Life Partners collected at the time the policy was purchased. Life Partners puts a policy through a rigorous scrutiny before it’s acquired. That includes a medical review to determine life expectancy. Their track record shows they do a good job on the projected maturity dates.
Some of you may have heard of Life Settlements when they were called viaticals. The earlier policy acquisitions were based on the needs of terminally ill patients whose life term was not very predictable. However, most Life Settlements offered to the individual investor are Senior Life Settlements and have a more predictable maturity cycle. Because I can limit my investment to Senior Life Settlements, the viatical policy is not up for consideration in my portfolio.
No investment is without risk. But I did my homework and I’m convinced that I can move a portion of my retirement funds into this investment and take control. This decision allows me to rest easier knowing that the outcome is predetermined.
Life Partners is a publicly traded company on the NASDAQ (LPHI). It has a proven track record with 14.7 percent annualized returns over the past 18 years. It’s quickly leading an industry from obscurity to the main stream. It fits the bill for me in regard to my personal retirement goals. I know what I will receive. I don’t have to worry about stock market fluctuations, economic downturns and business cycles because this is a noncorrelated investment. Recently Life Partners was featured in a Wall Street Journal article. WSJ.com – Life-Settlements Industry Sees Growth
There you have it. Do your own research and let me know what you think.
For more information on Non-Traditional Investments, click here.
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