WHAT IS A GOOD LOW-RISK INVESTMENT?
Are you wondering, “What is a good low-risk investment?” If you’re looking for the best place to invest right now to get the highest returns with the least worries, I’ve got something amazing to show you!
I’m Ted Thomas, and for the last 30 years, I’ve been involved in alternative investments that work for small investors as well as seasoned investors who want high yield and low risk.
People who want low-risk investments like to purchase CDs which are certificates of deposits from the bank. Also, they like to purchase treasury notes and bonds from the government.
Most of these investors have very little tolerance for risk, and there’s nothing wrong with that.
Today I’m going to answer your question, “What is a good low-risk investment?” Also, if you’re wondering, “What would be a good example of a low risk investment?” I’ll give you an example.
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WHAT IS A GOOD LOW-RISK INVESTMENT? – LOW RISK INVESTMENTS
What is the #1 safest investment? Treasury notes are considered by most investment advisors to be the lowest risk investment available. Treasury note buyers are willing to accept very low interest rates in order to have what they perceive as security.
A similar investment is bank certificates of deposit commonly called CDs, which produce low interest rates and little or no risk. Most of these deposits are covered by insurance, guaranteeing a return of your principal plus a very low interest rate.
Those two investments are considered the gold standard.
WHAT IS A GOOD LOW-RISK INVESTMENT? – THE PROBLEM IS LOW ROI
The problem is a 1% return on investment (ROI) isn’t going to take you to the wealth level you want or deserve. Bank interest rates are low, and your opportunity to earn higher interest rates is in the distant future.
It’s time to think about an alternative. I personally haven’t tried every investment. However, I’ve been involved in real estate for many years, and I’m generally risk averse.
Are there low-risk high return investments? Yes, and I want to highlight one for you today.
WHAT IS A GOOD LOW-RISK INVESTMENT? – LOW RISK & HIGH ROI
What investment has the lowest risk but also a high rate of return?
30 years ago, I discovered tax lien certificates and tax deeds. I was surprised when I discovered the outrageous interest rates that states allowed the counties to pay investors.
Those investors were willing to purchase tax lien certificates and pay someone else’s property tax.
The state legislatures authorized outrageous payments of interest on those tax lien certificates that ranged, at that time, from a low of 8% to a high of 50%.
Tax lien certificate interest rates have been revised over recent years to a low of 12% and a high of 36%. All of these numbers are generous interest rates.
WHAT IS A GOOD LOW-RISK INVESTMENT? – TAX LIEN CERTIFICATES
Approximately half of the states in the United States allow counties to sell tax lien certificates.
These are benevolent counties that have many bills and obligations to pay. For example, the local county must pay the police department, fire department, school teachers and other county employees.
The county provides many services, like contributing money to the hospitals for health care for people who can’t afford it.
WHAT IS A GOOD LOW-RISK INVESTMENT? – UNPAID PROPERTY TAXES
The point is property taxes are used to pay the many obligations of the county, and the property owner who fails to pay property tax creates a big headache, basically a burden for the county officials.
Money to pay the county obligations generally comes from property taxes.
The legislature mandates that the county board of supervisors or county commissioners levy tax and collect tax. If it’s uncollected, they must issue a tax lien certificate in half the states. The other half of the states will confiscate the property, as they are not so benevolent.
WHAT IS A GOOD LOW-RISK INVESTMENT? – AN INVESTMENT SECURED BY REAL ESTATE
Investors who are searching for low-risk investments will understand that risk will gravitate to the tax lien certificates. Why?
Because first of all, they will earn generous interest rates, and secondly, if they don’t get paid, the property will be awarded to the investor.
To be perfectly clear, investors purchase tax lien certificates directly from the local government at a government-controlled auction. Sometimes, online other times at live auctions.
WHAT IS A GOOD LOW-RISK INVESTMENT? – AN INVESTMENT GUARANTEED BY GOVERNMENT
The investors are purchasing a low-risk investment. When the defaulting property owner pays their late delinquent tax, the investor will have 100% return of capital plus an outrageous penalty interest rate.
The treasurer pays the tax lien certificate purchaser the 100% return of capital and the high interest rate set by the state.
This is considered a safe and secure investment where the investor will be paid, and if the investor is not paid, he or she will be awarded the property after having spent only pennies on the dollar for that ownership.
If this is interesting to you, I have a free mini course. It’s a free gift from me to you that will teach you the secrets of tax lien certificates and how to profit in tax deeds.
WHAT IS A GOOD LOW-RISK INVESTMENT? – TAX LIEN CERTIFICATE REDEMPTION RATE
According to county officials, 95% of all tax lien certificates are paid, that is, redeemed, and you’ll get paid the high interest rate. That leaves a small percentage of people who don’t get paid.
For clarity, let’s use an example of a $150,000 privately owned property, and the owner fails to pay the property taxes.
The county after many default notices will finally sell a tax lien certificate to anyone who wants to purchase the certificate.
WHAT IS A GOOD LOW-RISK INVESTMENT? – AN EXAMPLE
Mr. and Mrs. Investor purchase a tax lien certificate on this $150,000 property by paying the county $6,000 in past due taxes. Also, let’s assume they did that in the state of Arizona.
The maximum interest for a tax lien certificate in Arizona is 16%.
Mr. and Mrs. Investor have now invested $6,000 at the maximum rate of 16%. However, the unthinkable happens.
The property owner fails to pay the property taxes, in other words, fails to redeem and buy back the tax lien certificate by paying the $6,000 principal plus the 16%.
WHAT IS A GOOD LOW-RISK INVESTMENT? – FORECLOSING ON A TAX LIEN CERTIFICATE
Mr. and Mrs. Investor’s alternative is to foreclose on the property, so they hire an attorney to foreclose. The judge awards them the property.
They now have a $150,000 property with no mortgage, and their total investment was $6,000 plus the attorney fees. Let’s add $2,000 for the attorney.
WHAT IS A GOOD LOW-RISK INVESTMENT? – A HUGE RETURN ON INVESTMENT
Now, their total investment is $8,000, and they own a $150,000 home. So, for approximately 5%, they own a property with no mortgage.
It’s not the perfect investment, but it’s certainly a low-risk investment.
If they had been paid, they would have been paid 16%. Since they didn’t get paid, they own a home that they can sell for more than $100,000.
WHAT IS A GOOD LOW-RISK INVESTMENT? – ALTERNATIVE INVESTMENTS
What’s the lesson? The lesson is it’s okay to learn about alternative investments.
I’m sure someone has an even better story about gold, silver or commodities, or maybe even bitcoin.
I personally am risk averse. So, I like the math on this example.
We hope you enjoyed Ted’s lesson, “What Is a Good Low-Risk Investment?”
There are solid low-risk investments out there, but are they good investments if they’re also low-yielding and not keeping up with inflation? Treasury notes and bank CDs are low risk but also pay very low yields.
A little-known, low-risk investment that pays outrageously high rates of return is tax lien certificates.
Tax lien certificates:
• Are government-backed and guaranteed
• Pay interest rates up to 36%
• Are secured by real estate
95% of the time, the tax lien certificate is redeemed, and you get all your money back plus the high rate of interest. However, if it’s not redeemed, you get the property, and you get it without a mortgage.
You can purchase tax lien certificates at county auctions for pennies on the dollar of the property’s assessed value because you’re paying the delinquent property taxes.
How much do tax lien certificates cost? They come in a wide range of amounts to fit any budget, less than $100 to more than $100,000. So even if you have little money to invest, you can still get started and it’s not hard to learn.
If you’d like to know more about tax lien certificates and how you can profit from them, there’s no one more qualified to teach you than Ted Thomas, America’s leading authority on tax lien certificates and tax defaulted property investing.
Ted Thomas is the only one who provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops & web classes, and personal one-on-one coaching.
Get started today at no cost with Ted’s FREE Master Class. It’s only about 1 hour of streaming video and will open your eyes to the incredible opportunities available in tax lien certificates and tax deed investing.