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1/25/2018 7:38:29 AM
Posted: 8/16/2001 9:58:32 AM EST
Link Posted: 8/16/2001 10:09:00 AM EST
Did the title "Direct Participation Program" ever come up? I am thinking the they are a company that looks for investors to buy out ins policies(this is done with lotto winnings, court settlements and other that they can do a present value on) use the proceeds from it along with a percentage and use that as a return on your investment. Am I in the ballpark here? The company basically makes a spread on the present value they give the policy holder and the present value that the ins company is willing to deal in. Normally this is a pre-agreed amount with the insurance co. Let me know what they are telling you, either by e-mail or here.
Link Posted: 8/16/2001 10:26:42 AM EST
BTW using the simple "rule of 72" calculation that would mean you would have to be earning better than 11% to double at 6-7years. Risk vs Reward is in play here. Just to give you an idea. Mexican intermediate bonds are trading somewhere around 9-10% yld. Would be comfortable in investing in that?
Link Posted: 8/16/2001 10:29:50 AM EST
LT, what are the tax implications on foreign bonds???
Link Posted: 8/16/2001 10:38:19 AM EST
[Last Edit: 8/16/2001 10:36:02 AM EST by lordtrader]
Don't know, never had to deal with that before. However if a foreign investors buys securites in the states, the earning have a tax withholding based on a tax treaty we have with that particular country. My best guess is that it would be the same the other way around. If your question is are you exempt from any State or Fed on income. The answer is no. You are also exposed to currency risk. If their Peso gets devalued then you investment return drops also.
Link Posted: 8/16/2001 10:47:47 AM EST
Link Posted: 8/16/2001 10:50:33 AM EST
Lordtrader, a tax question. I have a lot of students loans to pay off. The interest that can be used for taxes is limited to $2000. Now if I had a house and took out an equity loan, and paid off the some off some of the student loans, wouldn't the interest on that be also be used toward a tax deduction? Since the current interest rate on my loans is 8%, I could probably even get a lower interest rate.
Link Posted: 8/16/2001 10:57:25 AM EST
Sweep, Although it has been a while since I was active, I have heard about this type of investment. Normally, these companies will attract insured individuals who's mortality is pretty set (such as people with terminal illness). There usually is a set number of years for the anticipated death of the individual who is 'cashing' in on their life insurance. The belief is that they might as well spend the money now, while still alive and may have a need for it. Rather morbid, but makes sense in some twisted way. What will occur is that the individual may try to cash in the life insurance policy with the insurance company, but will only get the cash value that the policy contains. For instance, a person may have a 100k policy, but since they only had it for 5 years, it may only have 7k of cash value in it. Depending on how soon death is anticipated, the company buying the rights to be the payee on the demise on the insured will pay a premium to the cash value to the individual. The risk is that the mortality table is incorrect at this case, and instead of the individual dying sooner, they die later. Once the individual dies, the policy proceeds are payed to the company that purchased the rights from the deceased. The way that the rights are able to be transferred is the company is named primary beneficiary on the policy. This is done because since there is a money transefer involved, the company has a monetary interest in the individual and can be a beneficary of the person. If I am correct in what you are describing is what I have detailed above, I am unaware of any company that has been offering 'rights' to individuals to take part in this process. The first thing that comes to my mind is this most likely is a highly illiquid investment, and I tend to shy away from the majority of those, since there is no secondary market for you to be able to sell your shares. I do want to put as a disclaimer that I am not absolutely sure of what this investment is, and I recommend that you contact the company, research it fully and get qualified opinions from an attorney or accountant before investing in it.
Link Posted: 8/16/2001 10:59:01 AM EST
Rule of 72 is the most basic way to figure out how long it would take to double your money given a specific interest rate. EX: [i]You are 7% on your CD you would then use that as 72 divided by 7 equals 10.28yrs[/i] Now this is not an exact science rather something that will get you in the ballpark. Mexican Gov't bonds seem to improving in credit since Vicente Fox came into office. He is doing some good for their economy. Some might say at the expense of the US economy. Wether that will hold true in the future that is left to be seen. As far as your investment, it just sounds like a DPP to me. Basically a DPP is a Limited partnership under a different name. Most of these will have a hi rate of return. What they don't tell you is part of that return somewhere in the future is also a return of investment principal. So 5-7yrs down the line you are only getting 3% in reality cause part of the money coming to you is your principal.
Link Posted: 8/16/2001 11:00:53 AM EST
Originally Posted By Sweep: If the Mexican bonds are a more or less a risk free investment, I'd like to know more.
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it should be noted that you will want to check out who is issuing the bonds. Normally bonds issued by governments are backed by the full faith and credit of the issuing government. Therefor, in a country that could be shaky (several countries in south america come to mind), the country may default on the bonds.
Link Posted: 8/16/2001 11:07:51 AM EST
ARDOC, sorry I can't help you on your questions I'm not an accountant. Although they keep having me temp with accounting firms. I have a temp gig with one on Mon. I'll see if I could get someone there to answer your question.
Link Posted: 8/16/2001 11:33:42 AM EST
Link Posted: 8/16/2001 1:28:30 PM EST
Three words: Norweigan waffle futures But Sweep, don't feel like you immediately have to put your money to work. You can leave it in a MM account while you look for something good, which is kind of difficult right now.
Link Posted: 8/16/2001 5:13:28 PM EST
About a decade ago, two guys from the finance-powerhouse, University of Chicago, won the Nobel Prize in Economics. Their theorem was, for any market, there is only one optimal porfolio (maximum expected return, for any given risk level). To ramble, was basically buy the reciprocal of the covariance of every security in the market to the market. Long story short, a few (very large) funds follow this winning formula. TIAA/CREF, and a few others. Ask your broker about TIAA/CREF or similar tools. Only one optimal porfolio exists, and can lever up or down risk by buying or shorting Gov't treasuries.
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