Trust deed investing is a little known high yield investment opportunity. With rates of return as high
as 12%, it can be a great way to fund your child’s college education. As a parent, your child’s future is always on your mind. One of the biggest concerns for most parents is how to pay for college. With rising tuition costs, books, housing, and other details, the cost can really add up. In fact, reports from the College Board indicated that the tuition cost alone can be upwards of $20,000 for a four year degree. This is for in-state tuition. This number rises dramatically with out of state schools and private institutions. For most families, this is a number that seems out of reach. However, with the right investments you can grow your money in such a way as to make paying for your child’s college education an attainable goal.
One type of investment that many parents take advantage of is bonds. There are a variety of different types of bonds that can be purchased from the United States government. Depending on the bond type it takes a specified amount of time to mature. Once the bond is matured the government will purchase it back for a guaranteed interest rate. Bonds are extremely safe investments as they are backed by the U.S. Department of Treasury. The main downfalls of bonds are that they earn fairly low interest rates, usually in the single digits and often as low as 2%, and they take a significant amount of time to mature. Bonds are a safe investment but don’t offer very high or timely returns.
Another investment that many parents use is a stock investment. With this type of investment an investor purchases parts, or shares, of a company. When the company makes money, so does the investor. If the company loses money, so does the investor. The risks and rewards of stock investing varies by the specific companies the investor chooses to invest in. There is not insurance against loss. To help make this investment less risky, investors can do their research. Make sure they know about the finances of the company they are investing in and choose companies that show stability over time.
A third investment that can help earn funds for college at a very high interest rate is known as
trust deed investing. In this type of investment, the investor purchases an interest in a mortgage that is given by a bank. The borrower purchases a property, the bank lends money, and the investor (known as the trustee) invests money for the privilege of holding the financial deed to the property. The trustee holds the deed for a specified amount of time from months to years, depending on the terms of the investment. As long as the trustee holds the deed, he/she earns interest from the bank and has almost no responsibilities as long as the borrower is current on payments. Interest rates on trust deeds are between 9 and 12 percent.
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