Your financial adviser has been talking to you about investing in a trust deed, but you aren’t sure what to think. A trust deed can be a high-yield investment but also has a lot of risks, so it’s important to ensure you understand both the benefits and drawbacks of this financial option.
Benefits of a Trust Deed
A trust deed usually has a short duration and can offer a low risk when properly invested in and maintained. They’re often a great option for people who don’t qualify for most bank lending options, such as those with poor credit scores.
They’re also a high-yield option for passive income, often having a return range between 6% and 35%. A typical trust deed has an average return of about 10%, which is a very attractive option for many people. That said, it’s important to know exactly what you’re getting into before you try this option.
Drawbacks of a Trust Deed
One thing that may be unattractive about investing in a trust deed is sourcing through brokers. Brokers may be paid based on commissions and could push you to take higher risks than necessary. Some may try to talk you into taking a riskier trust deed, one that isn’t right for you.
Furthermore, if you can’t pay off a trust deed or miss too many payments, you may risk losing a property. This problem is also true with mortgages, obviously, but it should be highlighted. Make sure that you truly have the ability to repay before getting a trust deed.
Making the Right Choice
There are several things to consider when investing in this kind of trust deed. For example, you need to decide if the lending terms are right for you. Are there other loans with better terms for which you might qualify? That makes them a better option for many people.
Lastly, do you feel comfortable with the potential loss of your property? That’s something that anybody risks when taking a trust deed. If you are comfortable, then it’s a great idea to consider one because their low-risk and high-yield nature makes them a potent passive income source for the right person.
Take the time to read through this information carefully to decide if investing in a trust deed is the right move for you. You may find that it suits your financial situation perfectly or is not a great option. Your financial future is important, so treat it with care and respect. Get in touch with us at GW Private Capital today for the help you need.