Structured settlements offer a steady stream of income over time with low risk, and it is best to work with a settlement broker to ensure a thoroughly researched transaction. The return on investment depends on the purchase price, but a 20% return is possible if purchased for 80% of the total amount.
Investors know that the decision to purchase a structured settlement is often a good one. This particular financial strategy offers the advantage of creating a continuous stream of income over an extended period of time, with relatively low risk. While it is possible to locate settlements independently and arrange for the purchase without the intervention of financial professionals, the most prudent way to purchase a structured settlement is to work through a settlement broker.
When purchasing a structured settlement, it is quickly apparent that this approach is a viable way to generate ongoing income that is made available incrementally over a period of time. Transactions of this type may be associated with the outcome of a judgment in a lawsuit, winning a lottery, or settling a claim on an insurance policy. The transaction typically involves offering the recipient a substantial percentage of the total balance in exchange for diverting the scheduled payments to the new owner. The original recipient receives a lump sum payment that is slightly less than the total allotted, while the investor can enjoy a steady stream of income that includes a yield that is slightly higher than the lump sum paid to the original settlement holder.
One of the main reasons it makes sense to buy a structured settlement through a broker is that the nature of the transaction is thoroughly researched beforehand. Just as with stock or bond offerings, brokers will take steps to qualify any structured transaction agreement before presenting the opportunity to the investor. Because brokers have ready access to the markets where settlements are traded, they can focus on opportunities that are within your preferred price range, have payment schedules that can meet your needs, and are considered very stable, with little to no chance that the settlement be overturned or reduced. In short, working through a broker helps you avoid some of the risks that would be present if you attempted to handle the purchase yourself.
The return realized after purchasing a structured transaction will depend on the amount of the purchase price. If it is possible to make the purchase for 80% of the total amount of the structured transaction, over time you will earn a 20% return from the transaction. Assuming at least a portion of those liquidation payments are invested in other types of investments, you may be able to ultimately generate an even greater benefit from the liquidation purchase.
Smart Asset.
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