I’m writing this after a trading day when Dow Jones Industrial Average officially lost all of the gains it had made so far this year. Further, it’s down about 14 percent from its 52- week high.
But that’s not all of the investment and economic news that’s noteworthy. Earlier this month trading was halted on the New York Stock Exchange because of some kind of tech issue. Of course, everyone immediately suspected the NYSE had been hacked – probably by the Chinese – but officials assured us that wasn’t the case.
It was merely a home-grown, garden-variety technological snafu that brought the world’s most important stock exchange to its virtual knees for several hours.
Humans err too
Finally, I just read that the Federal Reserve accidentally released confidential staff projections on the Internet. These are the forecasts that regulators use when they meet to decide what the Fed will do with interest rates. They are supposed to be kept secret for five years. If they become public knowledge, regulators fear the impact they would have on markets.
This, by the way, wasn’t a computer error, it was an old-fashioned human error. I highlight these things because they all illustrate how unstable our economy and some investments can be. I often fear that systems are becoming so big, the global economy so intertwined, and so many people are involved, that it’s beyond our ability to keep things on an even keel.
Keep it simple…
You’ve probably heard the advice that we would be wise to simplify our lives. I believe the same thing is true for our investments. If you can’t explain how your investment devices work, or they depend on the success of the economy of a nation you’ve never lived in, you might be going too far out on a financial limb.
One of the best ways to simplify your portfolio and get a strong return at the same time is by investing in First Trust Deeds through Evoque Lending. Loaning someone money at a double-digit rate of interest is very easy to understand and it brings excellent stability and predictability to your finances.
Being able to count on a given level of cash flow month after month is a great position to be in whether you need to build wealth for your retirement or you need to supplement other income sources during your retirement.
We’ve been working with successful investors for more than 15 years. We specialize in First Trust Deeds for California real estate, specifically Los Angeles real estate, Orange County real estate and San Francisco area real estate.
These are sometimes called “hard money” loans in the industry and we’ve developed a solid system to give our investors the security they require. Our first “fire wall” to protect our investors is to assure adequate equity in the property. This is typically a minimum of 40 percent and it works in two ways. First, should a borrower default, there’s sufficient equity to help assure that the investor is made whole. Second, when borrowers “have skin in the game” they stay motivated to make their payments; they have too much to lose should they default.
Security in knowledge
Along with this, we do a thorough job vetting borrowers and assuring that we get accurate appraisals. It’s critical that our investors are working with people who have the ability to make their payments and that we know the true market value of the property that’s being borrowed against.
All of these points are sound economic and investment principles. They worked 100 years ago and will still be good 100 years from now. Further, First Trust Deeds are easy to understand, unlike derivative collateralized debt obligations or any number of hedge funds.
However, I suspect that some who read this will have questions about how investing in First Trust Deeds will work for them and exactly what kind of return they can expect. I would be glad to take the time to give you all the details, so let’s start the conversation. Either give me a call or drop me an email and get started today.