Tax Lien Certificate:
Explanation
A tax lien certificate (TLC) is a kind of lien. According to Google Dictionary, a lien is “a right to keep possession of property belonging to another person until a debt owed by that person is discharged.”. Just to clarify, this means any kind of real estate. It can be commercial, personal, land with no building, so long as it is some sort of real estate. Specifically, what happens with a tax lien certificate is the following:
A property owner fails to pay enough property taxes
The county in which the property is located will put a tax lien on the property, keeping the owner from selling or refinancing it.
The county now auctions the tax lien to the highest bidding investor.
The investor now owns the tax lien certificate.
The investor must wait until the grace period ends before he or she may foreclose on the property. This grace period is anywhere from two months to four years.
After this grace period is over, you may foreclose on the property if the property owner has not paid you all that is owed.
Why is a Tax Lien Certificate a great investment?
In general, when you are looking for a great investment, there are a few factors in a good investment.
First, you want as little risk as possible. This is one of the lowest-risk investments you can find. If you are not paid in full, you can foreclose on the property. This happens about 1% of the time and is very fortunate for the investor if the property is more valuable than your investment. If the investor’s investment is more valuable than the property at foreclosure, this is very unfortunate for the investor. Another unfortunate situation that causes risk is the foreclosure by another Tax Lien Certificate investor. These are the only occasions that cause risk for the investor. You can dodge the risk by researching deeply about the property.
Next, you want a high-interest rate. The Tax Lien Certificate has a great interest rate. Ranging from 16% to 36% on average, it is way better than your bank’s savings account interest rate!
Also, you want to be able t control your investment. You can do this very well by researching the property before you buy.
Last but not least, you want the investment to be passive. This investment is not at all passive at first, but you can hire someone to purchase and research Tax Lien Certificates for you. After that, the investment is very passive.
Risk Rating: 7/100
Risk Manageability: Deep research
Risk Rating After Risk Managing: 1/100
Investment Capital Amount: $200-$500,000
Investment Return On Investment (ROI): 16%-36%
Time Until Full Investment is Paid Back to You: 2 months- 4 years
Specifically Advised Investment: There is no specific investment; contact your local county about investment opportunities.
Overall Investment Rating: 95/100
Money Market Accounts/Savings Accounts:
Explanation:
Money Market Accounts are one of the most known investments. Money market accounts are issued by many credit unions and banks. The reason why Money Market Accounts exist is so the bank or credit union may use it to invest in mortgages.
The investor gives money to the bank or credit union
The bank or credit union loans the money to people buying houses in the form of a mortgage
The bank or credit union receives on average 3.99% interest from the mortgage
The investor is paid in average a rate of 0.24% interest
The bank or credit union makes a profit of 601.5% more than the investor on average
Even though the bank makes more interest on your money than the investor does, this may be a great option for investors who must have absolutely no risk. This is a great option for your spending money or savings that you will need soon. Great investment if you want a few extra dollars, but not a good investment if you want your money to grow into a big number. (Don’t fall for the measly 0.01%.)
What makes a Money Market Account a good investment?
A Money Market Account is a great investment for people who want to make interest on their money and have no risk. This is especially good for people who have only enough money to live day to day. They can invest the spending money and take it out as soon as they need it. People who have low income will benefit from this, even if there is very little money made. This investment should not be used for money that you can live without or money that you want to invest in for a long time.
Risk Rating: 0/100
Risk Managability: No management needed
Risk Rating After Risk Managing: 0/100
Investment Capital Amount: $1-$100,000
Investment Return On Investment (ROI): 0.01%-3%
Time Until Full Investment is doubled: 21 to more than 50 years
Specifically Advised Investment CIT bank
Overall Investment Rating: 20/100
Stocks, Mutual Funds, Roth IRA, Traditional IRA, 401 K, Brokerage Accounts, etc.
Explanation:
A stock is a fraction of a company that gains and loses value depending on how well the company or economy is doing. When an investor buys a stock, the investor literally owns part of that company and his investment either gains value or loses value. For example, if an investor buys ten shares of ABC stock at the price of $100 each, the investor buys $1,000 of the company. If the value of the stock decreases in value to $80 and the investor sells it, he loses $200. If it increases in value to $110 and the investor sells it, he gains $100. There is no way to legally predict stock. Many stocks also have dividends, but most of the time, the point is the capital gains.
Mutual Funds are just like stocks, except when you invest in a mutual fund, you invest in many companies. S&P 500 is in investment for 500 of the biggest companies. When you invest in a mutual fund, you own a fraction of many companies just like a stock. Mutual funds are much safer than a stock because it is much more diversified. In fact, it seems like the S&P 500 is almost always at all-time highs because in average, large company stocks grow in value. Other than these facts, a mutual fund is just like a stock.
Roth IRAs, Traditional IRAs, and Brokerage Accounts are not investments. They are different accounts in which you can buy stocks and mutual funds. Each of them have different tax advantages.
What makes a stock a good investment?
Stocks are well known to be likely to make you rich after 30-50 years. Stocks are also known to claim the life savings of many people as well. The best investing strategy involves stocks. This strategy is to have a passive income and active income. You use the active income mainly to pay for the expenses of life, then you use the extra money to add to your passive income. Once you have enough money in your passive income, use a tenth of it to invest in something with high potential returns and perhaps has risk (stock is one of the options). By using this strategy, you can deal with the risk of the investment because you don’t have to change your lifestyle. You are completely safe if you lose your money. I strongly advise that you never invest in a single stock without a plan. I’ve learned this the hard way by losing 20% on my investment in OXY (Occidental Petroleum) stock because of COVID-19.
What makes a Mutual Fund a good investment?
A Mutual Fund is great because it has much less risk than a single stock because it is diversified. On average, S&P 500 (a mutual fund) grows at a rate of about 8-12%. For those who do not care too much about risking your investment, this is on average a good investment.
Risk Rating: 20/100
Risk Manageability: Research can be done about the success of the company you wish to invest in, but this decreases the risk only a little.
Risk Rating After Risk Managing: 18/100
Investment Capital Amount: $5-$10,000
Investment Return On Investment (ROI): 8%-12%
Time Until Full Investment is doubled: 12 to 9 years
Specifically Advised Investment S&P 500
Overall Investment Rating: 70/100
Real Estate
Explanation:
Real Estate is well known as a high price-high risk-high reward investment. This investment is very close to the opposite of a savings account or money market account because you invest someone else’s money to make a profit. The way it works is the following:
An investor purchases real estate
An investor uses a 2-4% rate mortgage to purchase the real estate
The occupant of the property pays the investor more money than the latter pays for the property
You make money because you own the property
Real estate is a very powerful strategy if you wish to put get a mortgage, 20% down, and
To be continued... (Check back! It may be updated soon!)
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