Most of you have probably heard that structured settlements can help dig you out of debt, pay for a medical procedure, or open the opportunity to go back to school for a degree. The reality of cashing-in on a structured settlement is that not only are they handy for a financial emergency, they can also become the vessel to a life-long dream.
To demonstrate exactly what I am talking about, imagine for a minute that I offered you $100,000 right now, tax-free, just for reading this article. However, just as we were about to seal the deal, I said that I had an even better offer that I would like to offer you. I explained that I would be willing to tack on $5,000, and all you had to do was wait an additional three years to collect it.
What’s the catch, you might wonder?
Well, there is no catch, other than the concept of time versus money. This is an important concept to understand when you are dealing with a long-term structured settlement, as this is where a lot of people make the mistake of playing it too safe. In most structured settlements, the payments have been set up to pay a large amount of money slowly over a long period of time. This offers you the greatest reward (amount of money), you just have to wait a very long time to collect it all.
The question I ask, is when might there be a good time to accept a penalty on any settlement? My answer would be, almost every time, unquestionably. This is, of course, assuming you are of sound mind, body, and have enough restraint to resist spending it all on a Bugatti Veyron Super Sport and a night in Fiji.
Going back to our example, let’s say that you accepted my offer for $5,000 extra, in return for waiting three years. You may say that you have proven exemplary restraint, and would be rewarded with $105,000 in just three years. I would congratulate your stamina, but suggest you would probably be a much richer person if you had just taken the initial offer.
Let’s say you took the $100,000 I gave you, and placed it in the bank at a modest five-percent interest rate, and just left it there. In three years time, considering the wonders of compounding interest rates, you would most certainly make more than $5,000. However, most amateur investors could turn that $100,000 into $115,000 with just a few safe bets.
This is what is called letting your money work for you, and it can only be accomplished when you have a large, lump-sum of cash to work with. Not all financial situations can be improved by this, so I strongly suggest you get in touch with a qualified client manager to discuss how cashing-in early could benefit your current personal finance situation.
Evan McTavish is a client manager at My Structured Settlement Cash, where getting cash for your settlement is a turn-key process.