ISBN 9780446578011 Published Jan. 2006
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Posted Jan. 23, 2008 7:35 a.m. by 800-ceo-read
In Personal Finance and Investing - 800 CEO Read Blog
The following is an excerpt from the book Fast Profits in Hard Times by Jordan E. Goodman
Published by Business Plus; January 2008; 9780446581561
Copyright (c) 2008 Jordan E. Goodman
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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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 (c) 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.