Skip to main content

Investing in Non-Traditional Assets – What Is the Value of My Promissory Note?

What is the Value of my Promissory Note?

Traditional Investment Assets

Stocks, bonds, mutual funds, and exchange traded funds are examples of "traditional investment assets.
The value (price) of these assets is public information published daily. Their value may fluctuate by the hour, but it is always known.

Non-Traditional Assets or Alternative Assets

Alternative assets are not publicly traded. Their value (price) is not published and is not available from any central source. They are bought and sold individually, privately, with no public disclosure. Examples include real estate, commodities, rare coins, stamps, artwork, LLCs, and private promissory notes. Recently, the term has been used to refer to other asset classes such as private equity, venture capital, and hedge funds. An accurate valuation of these assets typically requires a third-party, professional appraisal report. There is no public pricing information available.

Liquidity

Liquidity means that an asset can be easily, quickly and inexpensively converted to cash. Alternative assets (non-traditional financial assets) are less liquid than regular assets. Therefore, investors considering alternative assets are investing into the future; liquidity is sacrificed.

Advantages

The main advantage of alternative assets is that they diversify an investor's portfolio and offer higher potential yields. Since they are non-traditional investments, they do not move in the direction of the stock market and may, therefore, help a portfolio off-set market volatility. Also, due to lower liquidity, alternative assets are often mispriced and so offer opportunities for arbitrage.

Disadvantages

Due to its non-traditional nature, alternative assets are more difficult to add to a portfolio. Therefore, banks may charge an additional fee for holding the asset. Depending on the returns realized from the asset, additional tax forms may have to be filed. …

Read More…. by Lawrence Tepper

Finding Real Estate Deals Just Got Fast & Easy With this New Search Engine Built for Real Estate Investors & Wholesalers

The post Investing in Non-Traditional Assets – What Is the Value of My Promissory Note? appeared first on Note Investing Seminars.

Comments

Post a Comment

Popular posts from this blog

What Is a Promissory Note? What Are They Used for?

A promissory note is a written contract between parties-a borrower and a lender– signed by the borrower. It contains an unconditional promise to pay a certain amount of money on demand, or in installment payments over a period of time. It is used in a financing transaction – a lending transaction. The individual who promises to pay is the maker (borrower), and the person to whom payment is promised is called the payee or holder (lender). The loan transaction can be secured or unsecured. A secured loan has specified property pledged to cover the repayment if the borrower defaults on making the payments. Another form of collateral security is a co-signor. A co-signor, or a guarantor, is a person who agreements in writing to repay the debt if the borrower defaults. This means that the holder (lender) protects his financial interest by using the maker's collateral security or the maker's co-signer. If the maker fails to pay according to the agreement, the holder can foreclose on...
Post a Comment
Read more

Promissory Note Frauds and Tricks

I have been actively engaged in the promissory note business for over 40 years. My and my wife’s self-directed IRA accounts have been invested in notes for the same length of time. My note investments have been the foundation of my estate building. Because I believe that promissory notes can be an excellent investment vehicle for the average investor, I try will try explain what they are and how they work. But, I will also point out that notes can be misused and abused by dishonest people and by ignorant people. This article is the first of several articles in which I will attempt to inform the average investor about the benefits and warn the average investor about the detriments of investing in notes. Obviously, there is no perfect investment. Just as cars do not injure and kill people (bad drivers do), promissory notes do not trick and harm people (dishonest or ignorant sellers of promissory notes do). What Promissory Notes Are: Generally, promissory notes are a form of debt simil...
Post a Comment
Read more

5 Steps to Becoming a Master Investor

Diversify – Diversification is a powerful investment tool that helps you reduce the risk of holding aggressive investments. Diversifying simply means that you should hold a variety of investments that do not move in tandem in various market environments (for instance bull and bear markets). You do not need 50 different funds in order to diversify. You can diversify with five, at the most 10, mutual funds or ETFs. Keep fees to a minimum – For both mutual funds and exchange traded funds you can look at the 'total expense ratio. "The best case is an expense ratio less than 1%, and certainly no higher than 2%. have to watch out for "sales load". Be aware of your time frame – Match your time frame to the investment. For example, for money that you expect to use within the next year, focus on low-risk investments such as money market funds, certificates of deposit or US government bonds. Ignore the "gurus" – Pay no attention to the fortune-tellers and pro...
Post a Comment
Read more