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Is selling a structured settlement a good investment?
Before one decides to sell his structured settlement for another investment opportunity; it is worthwhile to consider the pros and cons of such an action. The most important advantages of structured settlements include regular payments that are free from income tax and are secured by state and federal laws. This cannot be said of many other investment options. Structured settlements can also be invested in government schemes that may offer low returns but are guaranteed. The main reason for an individual opting for another investment vehicle is the apparent high returns from that investment option. These options include stocks and real estate.
One should compare the pre-tax income from an alternative investment source to that from a structured settlement. Also, the process of selling a structured settlement involves a cost. This is because the amount of settlement payment sold is more than the lump sum obtained. This cost should be factored and compared to the returns from another investment. An important advantage of a structured settlement is that the individual is not required to manage the settlement payments.
No taxes mean freedom from keeping abreast of tax laws. With any other form of investment, a person has to first be confident enough of managing his own investment portfolio and control his finances. If one has the necessary experience and skills to run a business, lump sum obtained from the sale of a structured settlement can be used as capital. However, since the amount obtained is less than the value of the settlements sold, one should ideally try and sell as little of the structured settlement as possible. The assurance of regular income as guaranteed by a structured settlement should be traded for another investment option only after due consultation with an attorney. In fact, legal advice on the sale of structured settlement is a pre-requisite in several states in America. One advantage that other investment options offer is the freedom of managing one’s own money; this can be of use to those who are into financial trading and have their fingers on the market pulse. With ready cash in their hand, they can invest immediately when opportunity presents itself.
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