|
|
|
5 Mistakes People Make When Selling Structured Settlements
5 Mistakes People Make When Selling Structured Settlements
structured settlements, lottery winnings, annuities
Mistake One: Agreeing to sell to the highest bidder.
Unfortunately, some brokers or structured...
Be informed about the Medications You Take.
The recent withdrawal of the prescription drugs Vioxx and Bextra have arthritis patients concerned about their health, lawyers busy with lawsuits, and Congress poring over thousands of pages of documents obtained from the manufacturer. The drugs,...
Growing Faster Than Your Cash Flow? Let Factoring Fund Your Next Expansion!
Why wait weeks or months to get paid by your clients when you can access your money in a matter of days by factoring your invoices. When a business factors their invoices, they are allowing a third party to purchase their invoices at a discount...
It's Time to Review Your Family's Financial Security
(ARA) - If you're like most people, three years of volatile stock prices has given you new perspective on your financial situation. It's amazing how your perspective can change when you're standing on a window ledge looking down.
It's time to...
When to Sell Your Structured Settlement
A structured settlement often follows a life changing incident,
whether it be positive or negative. Due to these circumstances,
you may be faced with the need for a large lump sum payment
rather than small monthly payments over a number of years....
|
|
| |
|
|
|
|
|
|
The Time Value of Money
Life is about decisions, whether they relate to your work,
business or personal life. Often ignored is the interplay
between all these areas, and the fact that a little
interdisciplinary thinking can go a long way. This might sound
obtuse, but many important decisions can be made easier by
thinking simply, and a bit differently.
Before we do, a note about value, and 'utility'. Business is
about creating value. Our personal lives (according to
economists) are about maximizing our utility, where utility is
simply a measure of the happiness or satisfaction gained from a
good or service.
Think of it this way, and business is considered first. If
shareholders (either owners or investors) could create more
value themselves using other means, why bother running or
investing in a business? Assuming we don't all have a perpetual
income stream it comes back to this - if you don't create value
in today's economy, you'll be forced to do one of two things.
Change how you do things, or cease to exist. For business the
value question is rather important.
People have it a little easier in some respects. Creating
maximum utility is an incentive in and of itself. In the end, we
all want more, whether it is revenue and growth for business, or
old-fashioned utility in our personal lives.
To get more, we return to the decisions mentioned earlier, as
all the decisions we make have a direct impact on both value
creation and utility maximization, in particular those related
to finance. Successful strategic management (the direction you
want to take the business) is supported by your investment
policy (choosing which projects to undertake) and your financing
policy (how you fund everything). Linked to all of this is risk
management, or how you handle the risks associated with these
financial decisions.
Personally, financial decisions influence your quality of life,
and your ability to enjoy the things you want. Once again we are
back looking at the study of incentives - how people get what
they want, or need, especially when other people want or need
the same thing. In this case, it's maximum utility.
One of the cornerstones of modern finance assists us in
understanding which decisions to make, and it is equally
applicable to business and personal finance. Its known as the
time value of money. Simply put, $1 today is worth more to you
than $1 received in the future. Why? Money has a time value
because of interest rates, no matter how measly, making $1 today
more valuable than $1 received at some time in the future
because it can be invested today to provide a return. The income
from the investment will in turn, make the dollar you get today
worth more than the one promised you in the future. Perhaps an
example best illustrates the point.
Anne is offered the choice between $100 now, and $100 in a
year's time. She takes the cash now, and invests it in a
security (or bank) yielding 8%, and in a year has $108, which is
clearly more than if she deferred taking the money at the start.
Again, this comes back to the incentives mentioned earlier.
Interest rates are paid because someone else can use your money
now, and they are prepared to pay you a return for the privilege
of doing so, which is in truth a premium for taking
the risk of
giving your money to someone else. With business, this concept
is part of what is known as the Sharpe-Lintner Capital Asset
Pricing Model (CAPM for short), allowing people to work out, in
today's terms, the value of future cash flows on any project or
decision requiring investment. Widely used, this concept varies
in appearance and complexity, from sophisticated models
developed by General Electric to the small business owner using
the 'NPV' formula in an Excel spreadsheet.
There is another side to this discussion, and it's slightly more
personal. The time value of money can apply to you, and
specifically, your utility. To understand how, we need to look
at things the other way around and get a handle on the
incentives of everyone involved.
Think of large personal assets you might have, like a structured
settlement. The agreements reached in setting up the settlement
left you with a sense of security for the future and continuing,
dependable payments over time. Comfortable. Hmm. Let's look at
the incentives.
Think like they do. The illusion is that you will be better off
down the track with the settlement. The problem is, they don't
want you to have all your money now because they understand the
time value of money. Its worth more to them, and they bank on
the fact that you haven't given it a second thought.
Remember that structured settlements are designed so that the
paying company get the maximum benefit from the time value of
money. This doesn't happen by accident or through some amazing
act of benevolence driven by concern about your long term
well-being. It's pure market and negotiating power. Considering
the time value of your settlement, the incentive is for them to
keep your money as long as possible to maximize their value
growth.
The intent of this discussion is to make you think. Consider the
time value of money in your personal life. How much value is
there for you in holding first-mortgage on a property for 20
years, compared with maximizing your utility? How much utility
is your monthly settlement check going to provide you in 10
years? Just think about increases in the cost of living over the
next fifteen years, and how the monthly check stands up.
Avenues exist in today's marketplace for you to better utilize
these high-value assets like structured settlements and real
estate notes. Naturally, decisions to do so should not be taken
lightly, treating your largest assets as whimsically as an ATM
card. Whether in business or in your personal life, always
consult a diverse range of industry professionals to increase
the amount of information and knowledge brought to bear on any
decision. As mentioned at the start, risk management is an
important part of any decision making process.
Remember the time value of money. It can be used both for and
against you. And find out which way it is being used, just look
to which party has the larger incentives.
About the author:
Jeremy Ballenger is a consultant for Sovereign Funding Group.
An experienced, reputable company that offers convenient,
no-risk services to help you with the selling of your deferred
payments, business financing solutions including structured
settlements.
|
|
|
|
|
| National Structured Settlements Trade Association (NSSTA) |
| Provides structured settlements using periodic payments to resolve claims. |
| www.nssta.com |
|
| Structured Settlements |
| Setting up structured settlements for personal injury claims. |
| ilf.hartfordlife.com |
|
| Structured Settlements, Structured Annuity, Structured Settlement ... |
| Full-service plaintiff structured settlement firm since 1986, providing services and strategies for personal injury lawyers and clients during the ... |
| www.structuredsettlements.org |
|
| Structured Settlements | Annuity Purchasers |
| Structured Settlement Buyers. Purchasers specializing in structured settlements and lottery winnings. Site contains attorney, broker and investor ... |
| www.ppicash.com |
|
| Structured Settlement Cash for Structured Settlement Annuity ... |
| Annuity Transfers Homepage - Buyer of Structured Settlements · Home | Sell Your Payments | Brokers | Investors | Testimonials ... |
| www.annuitytransfers.com |
|
| EPS Structured Settlements Group: A Structured Settlements Company ... |
| EPS Settlements Group is located in Denver, Colorado and is a founder of the structured settlements industry. |
| www.epssettlements.com |
|
| Mckellar :: Structured Settlements |
| News. ... Skip Intro Always >> |
| www.mckellar.com |
|
| The Structured Settlement - What You Need To Know |
| About two thirds of states have enacted laws which restict the sale of structured settlements, and tax-free structured settlements are also subject to ... |
| www.expertlaw.com |
|
| Settlement Capital Corporation - sell structured settlements,sell ... |
| Direct purchaser of structured settlements and other annuities. |
| www.setcap.com |
|
| John Hancock Insurance and Financial Services :: Explore Our ... |
| A structured settlements annuity provides injury victims or the victim's ... John Hancock Structured Settlements and Attorney Fee Annuities are just two ... |
| www.johnhancock.com |
|
| Structured Settlements - Prudential Financial |
| Your company may become liable to pay a settlement as the result of a legal proceeding. A Structured Settlement Annuity provides ongoing periodic payments ... |
| www.prudential.com |
|
| Finance - Structured-Settlements Ezine Articles |
| EzineArticles.com allows ezine or email list publishers to upload or download free expert content that can be used within email newsletters or websites. |
| ezinearticles.com |
|
| Understanding Structured Settlements: A Novice's Guide to the ... |
| Learn what a Structured Settlement is in plain English. Find Structured Settlements company, payments, broker, annuity and loan info. |
| www.noendpress.com |
|
| structured settlements, personal injury, annuity, disability, accident |
| Structured Settlements allow income to be spread over time, which is safer ... Structured settlements are often ideal under the following circumstances: ... |
| www.structuredsettlementhelp.com |
|
| Structured settlement - Wikipedia, the free encyclopedia |
| Structured settlements were first utilized in Canada and the United States ... Structured settlements are now part of the statutory tort law of several ... |
| en.wikipedia.org |
|
| Structured Settlement vs. Lump sum - What to do? |
| More and more claimants are choosing structured settlements. ... Most structured settlements come in the form of an annuity, which is sold by a third party, ... |
| injury.freeadvice.com |
|
| Welcome to The Halpern Group, experts in structured settlements ... |
| Offers structured settlements, consulting and negotiation services to attorneys representing injured clients. |
| www.halperngroup.com |
|
| Structured Settlements Leader J.G. Wentworth, JG Wentworth ... |
| Structured Settlements Leader JG Wentworth, JG Wentworth Settlement Funding - More than 25000 individuals have come to JG Wentworth to finance their dreams ... |
| www.jgwfunding.com |
|
| DOG BITE LAW - Structured Settlements |
| For those reasons, changes were made to the Internal Revenue Code that enable knowledgeable attorneys to create "structured settlements." ... |
| www.dogbitelaw.com |
|
| Structured Settlements Law – Lawyers, Attorneys & Free Legal ... |
| I am confused by the number of internet sites that plug offers of structured settlements, sale of structured settlement annuities, and attorneys who offer ... |
| injury-law.freeadvice.com |
|
|