Self-Direct IRA Investing – Prosper With Promissory Notes

Promissory note retirement investing can be an important tool in your retirement planning. Promissory note investments have been around for a long, long time. In fact, promissory note investing was around way before banks were invented!

Before banks were invented, if a merchant or a farmer wanted to sell their asset or product, they had to either get paid in full with cash, or they had to get paid by the buyer with a combination of cash and the buyer’s promise to pay the balance later. Before banks were invented private merchants, private farmers and private investors accepted promissory notes in payment for assets.

Today, the banks handle the majority of the promissory note business. But, they do not handle all of it—they do not handle 100% of it. Private party notes are still used in specific business and financial transactions. Some examples of private party note financing that are commonly used today are:

  • A house transaction
  • A farm or ranch transaction
  • A sale of a business transaction
  • A divorce property settlement
  • A partnership property dissolution

All of these transaction offer potentially above average investment opportunities, if they are structured properly. They may offer a monthly cash flow that is above what is available from other sources. They may offer short-term profit opportunities, or, long-term retirement investing opportunities. They may offer above average interest rate yield. Essentially, each private party promissory note can be tailored to fit specific, special situations, if they are properly structured.

In order for you to benefit from this area of self-directed retirement investing, you should “do your homework”.

As best you can determine the following facts that apply to your personal situation:

  • How much cash do you have now for retirement investing?
  • How much cash will you have in the future for retirement investing?
  • When will the future cash become available for retirement investing?
  • Do you have a target retirement income amount?
  • Do you want to be an active investor or a passive investor?
  • Do you want to become involved in investing classes and training?
  • How much risk and volatility are you comfortable with?
  • Do you want to invest alone or with one or more partners?
  • Do you have investing experience?

Think long and hard about each of the above questions. Take your time and really “get acquainted” with your investing-self. Do not rush into any investment until you have sincerely and honestly answered these questions. In investing, as in many other areas, “hast makes waste”.

You have to learn to crawl before you can walk; walk before you can jog; jog before you can run.

Your goal should be to gradually, over time, ensure consistent monthly cash income for you to live on when full-time or even part-time employment is not an option. Your long-term goal should be “financial freedom”.

A cautionary note: Eighty to ninety percent of the people believe that they are above average. Assume that you are fallible. Be careful!

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Source by Lawrence Tepper

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