5 Tips for Investing in Structured Settlements


Did you realize structured settlements present unique investment opportunities? Find out how to invest in this specific aspect of the market here.

Every financially-savvy investor knows that one of the worst things that you could do is let your savings sit in a savings account. The paltry interest rate that you’ll receive on your savings is unlikely to outpace even inflation.

The result? Your hard-earned dollars slowly getting eaten up over time.

That’s why smart people choose to invest their dollars into something with a higher rate of return. But with so many options for investment, from real estate to cryptocurrency to the stock market to structured settlements, who’s to know what’s the best way to create significant ROI?

If you’re finding yourself stuck in that boat, then we’re here to help. In this article, we’ll shed some advice on an investment strategy you may not be familiar with — structured settlements — by giving you five great tips to keep in mind as you make this investment decision.

1. Know the Risks

Like any investment strategy, one has to take some time to understand the risks before investing in structured settlements.

A structured settlement is a scheduled payment of annuities to the winner of a settled lawsuit or a lottery. One can invest in a structured settlement by reinsuring a company that buys such settlements from the original recipient.

The risk here is that the original recipient is never sent the dough, and the company that bought the settlement transfers that risk over to you as the reinsuring investor.

2. Follow the Leader

Warren Buffet, the owner of Berkshire Hathaway who was once the richest man on the planet, has billions invested in structured settlements. Follow his lead with such investment calls.

3. Diversify, Diversify, Diversify

The old investment proverb of never putting your eggs in one basket is never truer than when one is considering investing in structured settlements.

The nature of the investment is such that liquidity isn’t an option except in the long-term (unlike the stock market, when you can cash out as long as there are buyers for the stock). Thus, it is recommended to only keep a small fraction of your portfolio in a structured settlement.

4. Look at Payer Credibility

Only reinsure companies that have an excellent history for paying out settlements. Never choose to invest in a structured settlement that is being paid out by a company with a history of shady dealings.

In addition, if the company looks like it may be going under, then you could be left holding nothing as a reinsurer. So do your due diligence beforehand.

5. Talk to a Professional

Last but not least, talk to a professional! There are lots of investment professionals out there who can help you with finding the right structured settlement for you.

Remember: someone who does this for a living is likely to be able to provide you with a far more solid direction than you could come up with when it’s your first time investing in this type of asset.

Are Structured Settlements for You?

There you have it — now that you know how structured settlements work and the five best tips for investing in these assets, you should be able to figure out whether or not this investment strategy is for you.

For more financial advice, be sure to check out the rest of the articles on the website!


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