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I get to work with retired people who have enjoyed very successful business careers. They worked hard, made good entrepreneurial or employment choices and now want to enjoy the fruits of their labor. The question they all have is how do they maximize their income in retirement? How can they maintain their lifestyle without dipping into their principal? I spoke to a former IBM Executive who is now a Trust Deed Investor and he spoke about “replacement income.” His thoughts are below and should be of interest for those of you who want to enjoy your retirement.
“If you’re retired like me, 1st Trust Deeds offer 9-11% and Capital Preservation!

After retiring from IBM in 2009 after 31 years, my main objective was to find the best investment that offered predictable “replacement income” and low risk enabling “capital preservation”. A key here is having predictable” cash flow which does not always mean the highest return i.e. you want a return that is dependable based on the lowest risk parameters. Another key is capital preservation, at over 50 years of age; one does not have as much time to earn back a loss nor the necessity of having to rejoin the workforce!
1st Trust Deeds in real estate are the best investment vehicle for predictable, replacement income and capital preservation:

  • returns of 9-11% over 1 to 3 year terms
  • capital preservation ,collateralized by high equity properties
  • greater returns in case of default, high equity value inhibits risk on original investment

I have done dozens of 1st Trust Deeds since 2009 and they are my go to choice over bank deposit at 1%, 5 year CDs at 1.6% or tax free muni bonds or fixed income mutual funds/ETFs at 3%. For example, I invested $100k in a 1st Trust Deed paying 10% over 3 years with a good FICO score / job earner, in a home with a loan to value (LTV) of 60% i.e. there was 40% of equity coverage “insurance” in case property values decline. And I was protected in case of borrower default, with higher premium points and fees added to my 10% and county trustee sale for recovery in case of foreclosure.

The best part is that all of the necessary due diligence i.e. in finding the best properties, underwriting quality borrowers, or default processing/recovery, is performed by the experts at Mortgage Vintage, Inc. There has never been a better time to invest in 1st Trust Deeds, and I endorse Mortgage Vintage, Inc. as your financial investment partner of choice.” C. Melillo (Retired IBM Executive)

What is your strategy for replacement income?