Is a Risk Free Investment a Fantasy?
Most financial consultants and advisors will tell you that a risk free investment strategy does not exist. Well I am a financial consultant and I am going to show you that it does exist.
Most homeowners do not think of their house as a risk free investment because it takes 30 years to pay it off and they will normally spend on a $200,000 mortgage at 6%, $431,676.38 plus property tax, plus insurance and in ten years we will only pay off $32,628.55 of the $200,000 mortgage.
If you could pay off the entire mortgage in about 7 to 12 years then it becomes a real investment.
To duplicate increasing your net worth $200,000 in 12 years requires an extra payment of $1000 per month above your normal monthly expenses and a return of 5 to 8 % which depends on your tax bracket because you will have to pay taxes on your gain.
The strategy allows you to not have to increase your monthly cash flow and it allows you to pay off your mortgage plus all your debt. This strategy is difficult to understand because it looks too good to be true and because you are paying off your mortgage in 7 to 12 years. The variables that come into play are your total house hold income, your total loan, how far into the loan are you, your total discretionary income and can you follow directions.
The basics of the program is to periodically pay lump sums of money towards your mortgage that will decrease your mortgage, decreasing the number of payments each time a lump sum is added to the principal.
The trick is understanding the dynamics of where the lump sum is coming from.
First you need to understand what an interest cancellation account is. Traditionally we put our monthly paychecks into a checking account and there it sits doing nothing for us until we pay our bills. Any discretionary income continues to sit there doing nothing for us.
An interest cancellation account is like a credit card combination checking account. Our entire monthly income is deposited into this account and our paycheck literally cancels the interest owed on credit borrowed.
A software program was devised to make decisions through complicated algorithms on what time of the month each bill and debt including the mortgage should be paid and the amount on each depending on the amount owed and the interest rate being paid and tell you how much your lump sum should be paid towards the mortgage and when you should make another lump sump All decisions are dependent on the set up information you put into the program. Because your entire income is deposited into the interest cancellation account the cost of using this money is decreased by your total income.
Now in this strategy the equity in your home is not necessary and your credit score can be relatively low. Because of this criteria a lot more people can get involved and even those people that are upside down and owe more on the house than the house is worth can be involved. If you can qualify for a credit card you can qualify for this strategy.
For convenience the account has checks and an ATM/Credit card. The dynamics of each family determines how much credit is available and. a software program predicts the size of the lump sum available.
Algorithms in the software program optimize the whole process and let you see a head of time how long it will take for you personally pay off your mortgage and other debt and what payments to make and when. Since a family’s entire income is deposited into the ATM/Credit card interest cancellation account the cost of the use of the ATM/credit decreases. Additionally new scenarios can be added to the program that allows you to predict earlier pay off dates.
About the Author: Peter Blackman lives in Phoenix, Az where he is a Financial Consultant and mortgage loan officer and network marketer.
For the things I like to write about see my blog links on http://www.sustainablehealth101.com
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