In today’s tremulous market, people are seeking solid investment strategies for their portfolios. In this article, we’ll cover two of investments that are trending in 2019.
1. Life Settlements
For those who haven’t heard of life settlements or know nothing about them, they’ve been around for quite a while now. However, they’ve only become popular as an investment strategy within the last decade or so.
The history of life settlements began in the very early part of the 20th century. The story is that a man named John C. Burchard needed a surgical procedure but couldn’t afford it. Burchard offered to sell his life insurance policy to his physician, Dr. A. H. Grigsby, in return for the operation, $100 in cash, and a promise to pay the remainder of his life insurance premiums. Dr. Grigsby agreed to the deal.
When Burchard passed away, Dr. Grigsby attempted to collect on Burchard’s policy but was challenged by the executor of Burchard’s estate, in which they won in an appeal against the first verdict favoring Dr. Grigsby. But the doctor took the case all the way to the Supreme Court and finally won.
That historic case, Grigsby v. Russell, 222 U.S. 149 (1911), essentially made it legal for people to buy and sell life insurance policies.
What Makes Life Settlements Safe Investments?
Firstly, it should be understood that it’s not the investors of life settlements who seek out people who are willing to sell their policies. Rather, those who are mature adults over the age of 65 or people suffering from some sort of severe illness.
Secondly, most people seeking to sell their policies for one lump sum have a short life expectancy – usually two years or less. This has made investing in life settlements more popular in recent years. So in terms of a medium-term investment, they’re fairly safe.
2. Exchange-Traded Funds
Exchange-traded funds (ETFs) are securities that track bonds, commodities, stock indexes or a basket of different assets. In ways, ETFs are similar to mutual funds, with one of the few differences being that ETF shares are traded on the stock exchange, leading to fluctuations in the price of ETFs throughout any given day.
Furthermore, more popular ETFs will usually have higher daily volumes, as well as lower fees than mutual funds. These things make ETFs more attractive in the eyes of investors than buying and selling mutual fund shares.
Some of the advantages of ETFs are as follows.
- A single ETF can provide exposure to a large group of equities, market segments, or styles. It can even mimic the expected returns of a single country or a group of countries, while at the same time tracking a broad range of stocks.
- ETFs have the benefits of diversification while having the liquidity of an equity fund.
- ETFs can be shorted.
- ETFs are traded throughout the day at an updated price.
- ETFs allow you to manage risk since you’re able to trade options and futures like you would any other stock.
- Open-ended ETFs feature companies where the dividends are immediately reinvested. The time for these reinvestments can differ for index mutual funds, on the other hand.
ETFs Have Lower Fees
Since ETFs are passively managed and have much lower expenses than actively managed funds, which means specific costs such as management fees, shareholder accounting expenses, and other service fees are much lower.