The less trodden investment opportunities: credit card and real estate

12 March, 2018

Investments in US saving bonds, mutual funds, and stocks are quite common. In fact, the share of Americans investing in stocks has always been above 50%, even during the 2008 recession. Yet, these investment options have high-risk quotients. Losses can be catastrophic, it’s why it is essential to choose a low-risk investment tactic if you can’t afford to lose money.

There are a few low-risk investment prospects but these come with a lot of conditions. Conversely, credit card and real estate come with less of these conditions. With the help of investor Gennady Barsky and credit card expert Brian Kelly, we will explore what these to opportunities have to offer.

Real Estate 

Real Estate offers a low risk quotient as residential and commercial properties can be used in a variety of ways. An intelligent way to invest real estate for high gains is to put your money in Real Estate Investment Trust (REIT) funds. These are realty-based mutual funds where the money is invested in commercial spaces, office complexes, malls, residential apartments.

A REIT can take part in a realty project through direct investment or through holding a mortgage. Direct investment funds are called ‘equity REITs’ and mortgage funds are called ‘mortgage REITs’. Some REITs invest in both equities and mortgages.

REITs receive special tax concessions and their dividend fund generation is better than risk-free investments in complex mutual funds. REITs need to have at least 100 shareholders. 75% of their trust assets need to be invested in real estate, cash, or US Treasury securities. 75% of the revenue should come from real estate activities. At least 90% of the REIT’s revenue should paid in dividends to the shareholders.

According to real estate investor Gennady Barsky, It’s better to invest a REIT in multiple real estate projects. This way, the risk is divided. If one of the projects is compromised, it won’t stop the cash inflow. Moreover, spreading your investments across a region can help you test the real estate market. IF one of the regions prove strong, more investments can be made in the vicinity.

Gennady Barsky considers REITs to be a relatively easy-to-understand investment system, a reason why he promotes investment in these trusts. Before you plunge into real estate investments, ensure proper research has been done on the subject.

Credit Card

It’s not a popular investment path but credit cards can be used to make money too. Frequent credit card users can use their spending habits to their advantage. In most of the cases, you’ll get a reward of 10% just by using the credit card. Hence, if you buy a 10$ Han Solo Carbonite Ice Cube Tray, you’ll earn 1$. With that, you can buy yoga socks you’ve been thinking about every morning.

Credit cards are simple. For a lot of credit card activities, you earn points. These points can be used to earn special bonuses and rebates on various products. The credit card guru, Brian Kelly explains, “There are a whole bunch of cards with huge value, but once you get the points, do you keep the card or not? What I say is this: Look at the annual fee and then the perks that you get from the card. A lot of hotel cards will give a free night every year for renewing. So to pay $75 for a $200 free night like you can with the Hyatt card, it’s a no-brainer.”

Cash value life insurance can also be used low-risk high yield investments but it isn’t viable for everyone. It’s better to take low-risk investments once you are in your 40s. Before investing anywhere, make sure you speak to an expert on the matter, like Gennady Barsky and Brian Kelly. Invest safely!