The choices for investors who are looking for new ways to invest are opening up. Whether it’s equities bought through ETFs or real estate REITs, private investors are able to access new opportunities for growth in their assets.
Here are several traditional and non-traditional investment options to consider.
Pipelines
Whether looking at the United States or Canada, pipelines that transport natural gas or oil across state lines between storage depots sometimes thousands of miles away is big business. Once the pipeline is built, even when saddled with debt, the pipeline company can service the debt and pay out plentiful monthly or quarterly dividends to awaiting investors.
The income stream varies from company to company but 6 to 10% in annual dividend income isn’t unheard of. One should bear in mind that whilst these are not wasting assets in the traditional sense, eventually the pipeline may stop operations and so return of capital should come from the income just in case.
Common Stocks & Bonds
The return on equities has been reasonable over the years (approximately 6% above inflation annually). One never knows what the future holds, but as a traditional investment that never goes out of fashion it’s a good plan to hold some common stocks. The income stream isn’t likely to be more than 2% annually, so if you’re planning to live off the investment then you’ll need to sell some shares each year to live.
The process of living off common stocks is typically balanced out by also owning some fixed income. These are debt instruments in the form of bonds issued by the U.S. government, local municipalities and corporations. Each is rated for their safety by the investment rating agencies and trusted to pay a stream of income until the bond matures, at which point it should be repaid. Bonds may be bought individually or inside index bond funds (from Vanguard, for instance) or an actively managed bond fund.
Timberland
Timberland has become a popular asset class with institutional investors like the Yale Endowment Fund that got in early with its timber investments across the U.S. The benefit of timberland investing is ownership of the standing timber, the underlying land, and any drilling rights to the oil and gas buried under the land too.
Most forests grow biologically 5-7% annually. A timber harvest is conducted to cut down the oldest trees to go to local timber markets for sale. Companies like Rayoneer and TimberWest provide access to investors. Rayoneer is public and TimberWest went back to private status recently.
IRS Tax Liens
An IRS tax lien is a debt owned either by a person or a company. When the IRS is unable to collect on the taxes owed, they refer the account to their 3rd party debt collector. Should collections still fail, eventually the IRS debts are auctioned off to companies or private parties.
It’s a little-known fact that tax debt leads can be purchased as investments to collect on the debt. It is then up to the individual to collect the money that was previously owed to the IRS and is now owed to them.
Whether going down the traditional route, looking for non-traditional investments or a mix of both, it’s always a good idea to educate yourself first. Investments are complicated and take time to understand properly.
