One of the most exquisite private homes in the entire San Diego area is now up for grabs.
Those of you who have a passion for architecture will have probably heard the name Richard Requa before. His firm, Requa and Jackson, was arguably the busiest architecture company in the 1920s in San Diego.
Whenever you see a charming, classic Spanish Revival property as you’re driving or walking around the city, chances are it was designed by Requa.
The architect was heavily influenced and inspired by the Andalusia area of Spain, and his works tend to reflect this. Requa even developed a signature style, known today as ‘Southern California Architecture.
The Old Globe Theater in Balboa Park, the D. E. Mann House at 1045 Loma Avenue in Coronado, the Del Mar Castle – these are some of Requa’s most well-known works, and they all showcase his unique, laid-back, Spanish-inspired Californian style.
Another one of Richard Requa’s iconic projects is the William A. Gunn House, located at 1127 F Avenue in Coronado.
It was designed by Requa and Jackson, with Milton P. Sessions serving as landscape architect, and completed in 1925 for Michigan furniture maker W.A. Gunn.
It’s one of the most beautiful examples of Requa’s Southern California Architecture, and it’s now looking for a new owner whose pockets run $39 million deep.
How Coronado Castle’s current owner Brian Mariotti took Requa’s design into the 21st Century
The jaw dropping mansion at 1127 F Avenue is also known as the Coronado Castle, and for good reason.
The property is reportedly roughly four times the size of an average Coronado lot, totaling 26,000 square feet and offering a lot of privacy and outdoor space.
Coronado Castle is an architectural gem protected by the Mills Act — a status that serves to significantly lower property taxes for the property. While lower property taxes are definitely nice to have, this property offers a lot – and we mean A LOT – more than that.
The current owner of the Requa-designed Coronado mansion is Brian Mariotti, the CEO of Funko, the toy company best known for its licensed vinyl figurines and bobbleheads.
Marriotti bought the 6,000-square foot property in 2017 for $12.2 million, and then purchased the lot right next to it, thus significantly expanding the site at 1127 F Ave.
The owner also invested heavily in upgrades at the Gunn house, but was careful to also preserve the building’s historical heritage.
The result is a stunning mix of 1920s Spanish Revival architecture and modern, laid-back California touches. Everything that was added to the home had to blend in with Requa’s original vision.
Paul Schatz, the owner of Interior Design Imports, who worked on the house with the Mariottis, told the Wall Street Journal that ‘the goal was to make everything new look as old as possible.’
Mixing business with pleasure – from home office to Star Wars-themed home theater, this property has it all
There are many highlights to this incredible property, but this is definitely our favorite: a 26-seat home theater featuring life-size Star Wars memorabilia, such as statues, weapons, and helmets.
Just imagine hosting a Star Wars movie marathon with family and friends, watching the original trilogy on a 20-foot screen powered by state-of-the-art 4k Max laser projector. Not too shabby, right?
The 7,000-square-foot Star Wars-themed basement also features an indoor golf room with a simulator, a tennis area, and it houses Mariotti’s impressive collection of toy figurines.
But the most impressive feat is the basement itself, which was not part of Requa’s original design.
The 15-foot-deep basement took six months to complete and required a 4-foot concrete foundation; the entire thing had to basically be ‘shoved underneath the existing house,’ as Jim Papenhausen of Papenhausen Construction told the WSJ.
In the end, Mariotti and his team were able to complete the project without damaging the historic structure in any way.
While a Star Wars-themed home theater and a massive toy collection exhibit area might not sound like the most practical amenities, the house does not disappoint when it comes to functionality, either.
The Mariottis understood the requirements of modern life, and turned the house next door into a four-car garage, and used the extra land to build a new family room wing and expand the outdoor area.
New owners will be able to enjoy a six-hole putting green, an outdoor living room area, a swimming pool, an outdoor kitchen, all bounded by century-old trees.
The house also incorporates four bedrooms, six full bathrooms, three-and-a-half bathrooms, a 14,142-square-foot guest house, a 1,300-square-foot home gym, and a spa with a massage table and a sauna.
For digital nomads, there is also a home office situated on the third floor at the top of the mansion’s castle-like tower. This area offers stunning views of San Diego and also includes an outdoor patio with a bar and a fireplace.
If you’re still not convinced that this is a one-of-a-kind property, a Spanish-influenced castle in the heart of California, then feel free to take a virtual home tour below, and find more details about this architecturally distinct house here.
Chris Clements, Jan Clements, and Lennie Clements of Compass are handling the listing.
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I’ve written in the past about cases against National Legal Staffing Support and Resolvly filed by Mississippi attorney Macy Hanson.
Attorney Hanson appears to have come up on the short end in a case filed by National Legal Staffing Support and Resolvly against him.
The case filed in Florida surrounded actions described in the Summary Final Judgment.
The court document stated, “On October 26, 2020, Plaintiffs National Legal Staffing Support, LLC (“NLSS”) and Resolvly, LLC (“Resolvly”) sued for breach of the confidentiality and non-disparagement provisions of two separate settlement agreements against Defendants Macy Hanson and his law firm, the Law Office of Macy D. Hanson, PLLC (together, “Hanson”). (Three other counts were dismissed without prejudice and former Plaintiff GM Law Firm, LLC dismissed all counts filed on its behalf). The two settlements contained non-disclosure and/or non-disparagement clauses that the Plaintiffs allege bound Hanson. The Plaintiffs allege that Hanson breached his obligations under these settlements by disclosing the existence of one settlement alongside disparaging remarks against the Plaintiffs and by disseminating a certain affidavit in subsequent litigation.
A jury trial was scheduled to occur on May 23, 2022. On the day of the trial before a jury was empaneled, however, it became apparent that there were no facts in dispute. The Parties disagreed about the interpretation of the two contracts and legal conclusions that were to be drawn from the facts, but the underlying facts were not subject to a genuine dispute. The Parties jointly requested that the Court entertain cross-motions for summary judgment, to which the Court agreed and the jury trial was cancelled. The transcript of the May 23, 2022 hearing, which lasted nearly five hours, is on file.
Shortly after the May 23, 2022 hearing, the Defendants requested leave to amend their answer with respect to several affirmative defenses. The Court granted the motion for leave to amend, over Plaintiffs’ objection, and reopened discovery limited to the newly pled affirmative defenses.
After discovery closed a second time, the Plaintiffs moved for summary final judgment regarding the Plaintiffs’ two breach of contract claims and the Defendants’ affirmative defenses. The Defendants opposed the Plaintiffs’ motion but did not file their own cross-motion for summary judgment.
Background & Undisputed Facts
Macy Hanson and his law firm was counsel for the four plaintiffs in Matthew Ali, et. al. v. Kevin Mason, P.A., et. al., Case No. 2:18-cv-01110-CBM-FFM in the United States District Court for the Central District of California. Macy Hanson and his law firm was counsel for the defendant, Je’Henna Williamson, in National Legal Staffing Support, LLC v. Je’Henna Williamson, Palm Beach Circuit Court Case No. 18-010100. Both cases ended with a written confidential settlement agreement, but Macy Hanson did not sign either contract.
Hanson was attorney of record in the Ali litigation. In the Williamson litigation, Hanson (who is barred only in Mississippi) represented Williamson without filing a notice of appearance. Undisputed record evidence demonstrates that Hanson ghostwrote pleadings for Williamson and negotiated the settlement with NLSS on her behalf. Williamson referred to Hanson as her attorney in contemporaneous emails. Paragraph 2 of the settlement agreement expressly identifies Hanson as Williamson’s attorney. Hanson’s co-counsel in both the Ali and Williamson lawsuits, non-party Dan Gamez who is also not barred in Florida, testified that he and Hanson represented Williamson in the Palm Beach lawsuit. Hanson equivocates on whether he was Williamson’s attorney for purposes of the Williamson litigation and the related settlement, but the record evidence is clear that he ghostwrote pleadings, reviewed the settlement agreement and Ms. Williamson was under the impression that Mr. Hanson was her attorney in the Palm Beach Circuit case.
Under the terms of the Ali settlement, Hanson was bound as counsel to the Ali plaintiffs to maintain confidentiality regarding the settlement’s existence and terms. Hanson was also bound as counsel to the settlement’s non-disparagement provision. The settlement contained a liquidated damages provision that required the Ali plaintiffs and their counsel to forfeit the portion of the settlement amount they received if they breached the agreement. Paragraphs 8, 9 and 10 of the Ali settlement expressly and repeatedly indicate that “the Plaintiffs’ counsel” is bound by these provisions. Hanson does not challenge the text or the plain meaning of paragraphs 8, 9 or 10. Hanson admits he received $50,000 in attorney’s fees as part of the Ali settlement.
Pursuant to paragraph 5 of the Williamson settlement, Williamson’s attorneys and agents were bound not to further publicize or produce or disseminate a certain affidavit executed by Williamson (the “Affidavit”). Paragraph 2 of the Williamson settlement identifies by name Macy Hanson and non-party Dan Gamez as Williamson’s attorneys. At the expressed written request of Hanson, the Williamson settlement included a release of claims against Hanson and his co-counsel Dan Gamez. According to Hanson’s email, he did not want to be sued for his obtaining or use of the Williamson affidavit in connection with the Ali settlement or litigation.
In November 2018, and within approximately 30 days of the execution of both settlements, Hanson engaged in conduct which the Plaintiffs allege violated provisions of the respective settlement agreements to which Hanson was bound. The Plaintiffs allege that Hanson breached the Ali settlement’s confidentiality and non-disparagements provisions through a public reply to a comment on an online article concerning the Ali litigation on ClassAction.org. Hanson’s public reply disclosed the existence of the Ali settlement and contained language disparaging the Plaintiffs as having perpetrated a “scam” and creating “victims:”
“Hey, Jeff, how long have you worked for NLSS and Greg Fishman? THIS CASE WAS DISMISSED BECAUSE THE DEFENDANTS SETTLED. Co-counsel, Dan Gamez, and I have filed a new class action case. Despite what Jeff (fake name, I am sure) claims, this is a complete scam and all victims of its should talk with an attorney. Dan Gamez and I would be happy to discuss this with any of you.”
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[Emphasis in original]. Hanson admits he wrote this comment and the comment is part of the record evidence in this case.
The Plaintiffs also allege that Hanson breached the Williamson settlement’s confidentiality clause regarding the Affidavit by using the Affidavit in subsequent litigation. It is undisputed that the discredited Williamson affidavit was filed as Exhibit A to a copy-cat lawsuit filed by Hanson known as Vivian Grijalva, et al. v. Kevin Mason, P.A., et al , Case No. 8:18-cv- 02010- MCS-DFM (filed Nov. 9, 2018). The Affidavit was later stricken by the district court as irrelevant. See D.E. 115 in Grijalva.
Hanson dismissed Grijalva with prejudice but without any settlement or agreement with either NLSS or Resolvly. Two subsequent copy-cat lawsuits were filed but dismissed with prejudice. See Zachary Hodges v. GM Law Firm, LLC, et al, Case No. 1:20-cv-03799-JPB (N.D. Ga.) (filed Sept. 18, 2020) and Brian Winkler v. GM Law Firm, LLC, et al, Case No. 3:20- cv-08248-DWL (D. Az.) (filed Sept. 21, 2020. Another similar multi-plaintiff but consolidated lawsuit was filed in the Southern District of Florida and dismissed on October 12, 2021. See White, et. al. v. GM Law Firm, LLC, et. al., Case No. 9:21-cv-80896 (S.D. Fla.) (filed May 18, 20 21).
This lawsuit was filed in April 2020.”
Court Orders Hanson to Pay
The Judge ruled that Macy Hanson did not have the decision fall in his favor. In fact, the Judge entered a Final Judgment in favor of Plaintiffs National Legal Staffing Support, LLC and Resolvly, LLC, whose address is 1515 S. Federal Highway, Suite 113, Boca Raton, Florida.
The Judge stated Hanson and his law firm will have to pay “the amount of $50,001.00 (fifty-thousand one dollars), plus prejudgment interest in the amount of $10,661.02 (ten-thousand six-hundred sixty-one dollars and two cents) for a total amount of $60,662.02 (sixty-thousand six-hundred sixty-two dollars and two cents), that shall bear post-judgment interest at the prevailing statutory rate established pursuant to § 55.03, Florida Statutes, (4.75% annually through December 31, 2022).”
You can read the court document here.
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
While on the West Coast, homes in the $20 million range compete in cutting-edge amenities and intricate home design, heading to the Rocky Mountains introduces us to a whole new type of ultra-luxury: the type that comes with massive acreage and tons of history.
That’s the case with Colorado’s iconic Redstone Castle — a 153-acre property known as one of the state’s most storied monuments — which was listed for sale back in 2020 with a $19.75 million price tag and sold in April 2022 for $11,975,000.
Set in the town that inspired its name, Redstone Castle (also known as the Ruby of the Rockies, Cleveholm, or Osgood Castle), the massive estate is 48 miles away from Aspen.
The property includes a carriage house, garages, and horse arena, plus early water rights and the right to build 20,000 square feet of additional cabins or cottages in private, wooded areas on the estate’s grounds.
“Redstone Castle is one of the most regal and oldest mansions in the Colorado Rockies,” said Chris Souki with Coldwell Banker Mason Morse, who represented the property when it came to market.
“It’s a true piece of history. The irreplaceability of the castle, combined with the acreage, pristine setting and value created through the mindful stewardship of the current owners, make this property an incredible opportunity.”
Built in 1902, the historic property was brought to modern standards by its former owners, identified by The Denver Post as April and Steven Carver.
With visions of returning the castle to its original glory, they took meticulous care to preserve the 42-room, 24,000 square-foot home, bringing it into the modern era with all-new bathrooms, updated kitchen and infrastructure.
The renovated interiors today reflect the same air of European opulence from a century ago: leather embossed walls, Tiffany-designed chandeliers, aluminum leaf ceilings and frieze, linen-lined walls by Italian artists, and 14 fireplaces with imported marble and tile.
The history of Redstone Castle, Colorado
Perched on the edge of the Crystal River and surrounded by dramatic red cliffs, cascading waterfalls and 100-year-old pine trees, Redstone Castle (also known as Cleveholm or Osgood Castle) has maintained a towering presence in Colorado history — and is listed on the National Register of Historic Places.
The iconic Tudor-style mansion was built by coal magnate John Cleveland Osgood in 1902 and became a beloved hunting and gaming destination for America’s most powerful dignitaries of the day, including Teddy Roosevelt, J.P. Morgan and the Rockefellers.
Osgood, at the time one of the country’s richest men, based the castle’s design on the ancestral home of his wife, Alma, and fitted its lush interiors with antique European furniture and work by Gustav Stickley and Louis Comfort Tiffany.
When John Cleveland Osgood’s prosperity ended, the coal magnate moved away from the area, only to return to Redstone Castle in the late 1920s, to spend his remaining years there.
After Osgood’s passing, his wife tried to convert the house into a resort, but the Great Depression made that economically unviable; however, later owners were able to run it as a hotel into the 1990s.
By 2003, the property ended up in the possession of the state, and the IRS auctioned it off online in March 2005.
Locals feared that a developer might buy the property and demolish the existing structure, but the winning bidder, Ralli Dimitrius, restored it and reopened it for tours, bringing much-needed tourist traffic to Redstone.
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Redstone Castle on the big screen: the house in ‘The Prestige’
Now, if you’ve never even been to Colorado, but the house still seems oddly familiar, there’s a good reason for that.
Redstone Castle has had quite a memorable big screen presence, as the home was used in Christopher Nolan’s 2006 movie, The Prestige.
The $40-million movie about turn-of-the-century rival magicians starred a stellar cast that included the likes of Hugh Jackman, Christian Bale, Michael Caine, Scarlett Johansson, and David Bowie.
According to the Post Independent, the Colorado scenes were filmed mostly at the Redstone Castle and along the road toward Marble, bringing together a 110-people crew to the area to shoot the scenes on location.
The Colorado castle’s future as a wellness center
In April 2022, Redstone Castle finally found its buyer — after nearly two years on the market.
Stephane De Baets of RC Ownership LLC bought the property for Elevated Returns and announced plans to open a wellness resort at the 25,127-square-foot property, according to The Aspen Times.
The $11.9 million sale ushers in a new chapter for the 120-year-old property, which will live on as a hideaway wellness retreat.
According to Redstone Castle’s new owner, an agreement has been reached with Thailand-based RAKxa Wellness, and the hospitality company will be opening an upscale spa retreat on the property known as the Ruby of the Rockies.
*Note: This article was originally published in September 2020, when the Colorado castle was first listed for sale. It was later updated to reflect the recent sale and to include information on the new owner’s plans for the property.
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Interest rate options enable investors to hedge, speculate on, or otherwise manage their exposure to interest rates. These financial derivatives are available as both puts and calls, and traded on major options exchanges.
Interest rates in the U.S. fluctuate continuously, with the Federal Reserve being a key driver, but not the only one. To mitigate these fluctuations, and also to profit from them, professional money managers turn to interest rates options as a source for risk management.
Interest rate options are sold on major options exchanges as standardized puts and calls, as the two main types of contracts are called in options terminology. Similar to puts and calls on equity securities, interest rate options represent directional bets on the value of an underlying asset.
The value of interest rate options is tied to yields on interest-rate-linked assets, typically Eurodollars and U.S. Treasuries of various maturities.
Buyers of interest rate options can buy exposure to various portions of the yield curve, for example, the 2-year, 5-year, and 10-year treasuries are standardized terms commonly sold on the CME Group exchanges. Professional money managers may use puts or calls at any given maturity to express their views on the future direction and volatility of interest rates.
How Interest Rate Options Work
Interest rate options afford the buyer the right to receive payment based on the spread between the yield of the underlying security on the expiration date and the original strike rate of the option, net of fees.
Interest rate options in the United States feature “European style” options exercise terms, which means they can only be exercised on the expiration date.
This contrasts with equity options, which more often contain “American style” exercise terms. This means they can be exercised at any time before they expire.
Buyers of interest rate options pay a “premium” per the terms of the options contract, which is the price paid by the buyer. Options pricing can be complex, to say the least, and to profit on a trade the buyer of the option will need interest rates to move in their favor enough to cover the cost of the option’s premium before they can profit.
In the event that interest rates don’t move in the option holder’s favor enough to overcome the strike rate, the option will expire worthless and the option holder incurs the total loss of their premium.
We’ll cover how this dynamic plays out with respect to both interest rate calls and puts.
How Do Interest Rate Call Options Work
Buyers of interest rate call options seek to benefit from rising interest rates. Should the yield on the underlying security close above its strike rate on the expiration date, the owner of an interest rate call option will receive a cash payout. This payout will be the difference between the option value at maturity and its strike.
Note that interest options are cash-settled. Unlike equity options, no exercise is required. If the rate is higher than the strike rate, the holder is paid the difference.
Interest rate call options, much like equity call options, give the buyer unlimited upside exposure to rising yields.
Holders of interest rate call options bear the risk that the option might expire out-of-the-money should interest rates remain beneath the strike by the expiration date. In this case, the maximum loss the owner of an interest rate call option can expect is limited to the premium paid.
How Do Interest Rate Put Options Work
In contrast, buyers of interest rate put options seek to benefit from falling interest rates. Interest rate puts give the put holder the right to receive payment based on the difference between the strike rate and the yield on the underlying security at expiration.
In this case, the strike rate is typically the maximum possible gain that a put holder may receive.
Holders of interest rate put options bear the risk that the option might expire worthless (out-of-the-money) if interest rates rise above the strike by the expiration date. In this case, the maximum loss the owner of an interest rate put option will incur is limited to the premium paid.
What Are the Risks of Trading Interest Rate Options?
Trading interest rate options involves enormous risk for any trader who either, 1) doesn’t understand the basic drivers of options valuation and interest rates, or 2) doesn’t understand how to structure their options trade properly to cap risk exposure. The corresponding leverage on options trades can result in enormous losses if improperly managed.
Traders will need to manage a number of key risks, and they may want to consider different strategies for trading options, when it comes to buying interest rate puts and calls. This includes “market risk,” which is the risk of price movements caused by any macroeconomic factor that affects the financial markets. It also includes “interest rate risk,” which is the risk that changes in interest rates might erode the value of one’s holdings.
Finally, user-friendly options trading is here.*
Trade options with SoFi Invest on an easy-to-use, intuitively designed online platform.
Interest Rate Option Example
As an example, an investor seeking to hedge (or protect) their portfolio against rising interest rates can choose to buy an interest rate call option on a 10-year Treasury bond, expiring in 2 months at a strike of $50.00.
Strikes on interest rate options are a pseudo-conversion where the interest rate is multiplied by 10x and denominated in dollars. Therefore a 5.0% rate converts to a strike price of $50.
If the option’s premium is quoted at $0.50, then buying a single interest rate call option would cost you a $50 total premium, as each interest rate option affords you exposure to 100 shares of the underlying.
If yields rise for the next 2 months until the option expires, the underlying might be worth $55 by the time it’s exercised.
In this instance, you can calculate your net profit using the following equation:
(Underlying rate at expiry – Strike Price) X 100 – Contract Premium = Profit
($55 – $50) X 100 ) – $50 = Profit
$5 X 100 – $50 = Profit
$500 – $50 = $450 net profit
Remember that each option contract grants exposure to 100 units of the underlying, while options premiums are quoted for a single unit of the underlying. Remember also to use the actual total contract premium paid, as well as introduce a multiplier of 100, when calculating your net profit.
The Takeaway
Interest rate options can be of interest to investors who understand the underlying drivers of these securities. They essentially provide direct exposure to interest rates, on a leveraged basis, at a relatively competitive cost.
When employed strategically, interest rate options enable investors to enhance their upside or mitigate their downside in a volatile rate environment.
If you’re ready to try your hand at options trading, You can set up an Active Invest account and trade options online from the SoFi mobile app or through the web platform.
And if you have any questions, SoFi offers educational resources about options to learn more. SoFi doesn’t charge commissions, and members have access to complimentary financial advice from a professional.
With SoFi, user-friendly options trading is finally here.
FAQ
What are interest rate future options?
Interest rate future options are futures contracts which derive their value from an underlying interest-bearing security. The buyer of an interest rate futures option (the “long position”) purchases the right to receive the interest rate payment in the contract, while the seller (the “short position”) is obligated to pay the interest rate on the underlying contract.
In either case, interest rate future options enable both buyer and seller to lock in the price on an interest-bearing security, for future delivery, which offers both parties some level of price certainty.
What is an interest rate swaption?
Interest rate swaptions represent the right, but not the obligation, to enter an interest rate swap agreement on an agreed-upon date.
In exchange for the contract premium, the buyer of an interest rate swaption can choose whether they want to be a fixed-rate payer (“payer swaption”), or fixed-rate receiver (“receiver swaption”) on the underlying swap, with the counterparty taking the variable rate side of the transaction.
Unlike standard interest rate options, swaptions are over-the-counter products, which means they allow for more customized terms, so there’s more variety when it comes to expiration, the style of options exercise, and the exact notional amount.
What is interest rate risk?
Interest rate risk is the exposure of an investment to fluctuating interest rates in the open market. Interest rates can change on a daily basis according to any number of market influences, including investor expectations, actions, or even statements made by central banks.
If interest rates rise on any given day, that shift will typically erode the value of bonds and most-other fixed income securities. Conversely, if interest rates were to fall, the market value of outstanding fixed-income securities will typically increase instead. Interest rate risk represents your investment exposure to these fluctuations in rates.
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SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
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For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes. SOIN0522014
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Shortly after graduating from New York University with a Master’s degree, Melanie Lockert turned to food stamps, as she worked her way out of $81,000 in student loans.
“There were a lot of emotions around carrying that debt. It caused a lot of stress and depression and anxiety for a long time,” she shared with me recently during an interview on my podcast.
The student loan crisis in America has reached epidemic proportions. With households across the country carrying $1.26 trillion in student loans, it is the second largest category of debt following mortgage debt.
For the class of 2016, the average student loan balance is $37,172, up six percent from the previous year, according to a new analysis by student loan expert Mark Kantrowitz published in the Wall Street Journal.
If you’re struggling to make ends meet due to student loans or wondering how you’ll ever pay off the debt in a timely manner, here are some key steps to support you along the way.
Never Pay Late. Ever.
Whoever likes to call student loans “good debt,” has probably never faced a late payment. “Falling behind on payments can cause federal loans to enter default, triggering expensive fees and collections,” says Heather Jarvis, attorney and student loan expert.
If you miss several payments and are in default, federal loan borrowers may also seize your wages, tax refunds and possibly social security benefits. And you can only imagine how all this can damage your credit score. (Keep reading for advice on what to do if you’re already in default.)
To avoid ever paying late, sign up for automatic payments with your lender. Doing so could also earn you a reduced interest rate (usually 0.25%), which could save you hundreds of dollars, maybe more, over the life of your loan.
Extend the Term
Speaking of your loan’s life, extending the term from 10 to 15 or 20 years could provide you with some payment relief since when you extend the term, your monthly payments decrease.
Bear in mind that since your interest rate remains the same this strategy may mean you’ll end up paying more to pay off the loan over time.
One way to avoid paying too much more interest is to take advantage of the smaller monthly payments for only a window of time. As soon as your finances strengthen place more than the monthly minimum towards your balance to help you get out of debt closer to your original term. Be sure to place extra payments directly towards the principal to knock down the debt even faster.
Tap Government Assistance
If you have federal student loans you may qualify for Income-Based Repayment (IBR), a government program that helps qualifying borrowers cap loan payments to a percentage of income, typically 10% of their income. The program will also forgive any remaining student loan debt after 20 or 25 years of making payments.
The Department of Education also has a program called Public Service Loan Forgiveness (PSLF). If you work full-time for a “public service” employer such as not-for-profits, AmeriCorps or PeaceCorps, the military or a government agency, PLSF may forgive your remaining federal loan debt after 10 years of employment.
If You’re Already Behind…You Have Options
If you’re in default, Jay Fleischman, a student loan and bankruptcy attorney, says you may be able to consolidate your loans under the U.S. Department of Education’s Direct Consolidation Loan Program, which is free and does not depend on creditworthiness. “You could also rehabilitate by making nine agreed-upon monthly payments over a 10-month period of time with the collector assigned to the account. Those payments may be adjusted based on your income, and payments can be as low as $5 per month,” he says.
For private student loan borrowers, “the situation is markedly different because there is no right to consolidate or rehabilitate unless the lender has a specific program to do so,” says Fleischman. Contact your loan servicer and learn about ways you may be able to reduce or eliminate payments until you get back on your feet, he says.
If your lender won’t budge, you may choose to remain in default until a settlement opportunity presents itself or until the statute of limitations for collection expires. As a last resort, you may also consider bankruptcy as a way to wipe out other debts and repay your student loans under court supervision. “Though bankruptcy may not wipe out your student loans except in limited circumstances, many people opt for bankruptcy as a way to get more control over the ways in which your loans get paid,” says Fleischman.
Tap Home Equity…With Caution
Homeowners may be eligible to use a home equity line of credit (HELOC) to pay off their remaining student loan balance. This allows them to pay off the student loan with the existing equity in their home and save money if the HELOC has a lower interest rate than the student loan.
There’s also a new program offered by online lender SoFi called the Student Loan Payoff ReFi that allows some homeowners to pay down student debt using their home’s equity. SoFi refinances the total amount of your student loans and existing mortgage at a lower rate. Through that process your student loan balance is paid off directly to the loan provider.
To qualify, SoFi says borrowers need healthy credit scores (check your free credit score to verify you qualify), a debt-to-income ratio that’s 45% or less (calculate debt-to-income ratio to see if you fall under this number) and a loan-to-value ratio that’s 80% or less (meaning you can’t be underwater on your mortgage). You can calculate your debt-to-income ratio with Turbo, and
Just keep in mind that when paying off your student loans with home equity – be it through SoFi or another lender – if you default on the consolidated loan the lender has the right to use your home as collateral and foreclose on the property. It’s a serious risk if you don’t have enough in savings or stable income to help you get by during tough times.
Remember to Deduct It
Student loans are no fun, but paying them can yield lower taxes. Each year the IRS lets borrowers deduct up to $2,500 in student loan interest from their taxable income.
Maybe Your Employer Can Help?
A growing number of companies are helping employees squash their student loans as an added perk like a 401(k) and health care.
Gradifi is a Boston-based start-up that’s working with over 200 employers to set up its student loan pay down plan, including PriceWaterhouseCoopers.
It’s a trend that’s likely to grow over the years with more than 50 percent of student loan borrowers saying they would rather receive student loan benefits than heath care from their employer.
Start a Side Hustle
While it’s important to cut back on spending to make room for paying down debt, that move alone isn’t always enough. “Pinching pennies and cutting back is really useful as an initial strategy, but at some point, there’s only so much you can cut back,” says Lockert, whose now chronicled her debt payoff strategies in the book Dear Debt: A Story About Breaking Up With Debt. Through a series of side hustles over the years, including housecleaning, event assisting and pet sitting, earning $10 to $50 per hour, Lockert managed to not only afford her living expenses, but also erase five figures worth of student loan debt.
Depending on your interests, you can find relatively easy gigs at sites like TaskRabbit, Tutor.com, GigWalk and Care.com.
Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at [email protected] (please note “Mint Blog” in the subject line).
Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.
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In Best Low-Risk Investments for 2023, I provided a comprehensive list of low-risk investments with predictable returns. But it’s precisely because those returns are low-risk that they also provide relatively low returns.
In this article, we’re going to look at high-yield investments, many of which involve a higher degree of risk but are also likely to provide higher returns.
True enough, low-risk investments are the right investment solution for anyone who’s looking to preserve capital and still earn some income.
But if you’re more interested in the income side of an investment, accepting a bit of risk can produce significantly higher returns. And at the same time, these investments will generally be less risky than growth stocks and other high-risk/high-reward investments.
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Determine How Much Risk You’re Willing to Take On
The risk we’re talking about with these high-yield investments is the potential for you to lose money. As is true when investing in any asset, you need to begin by determining how much you’re willing to risk in the pursuit of higher returns.
Chasing “high-yield returns” will make you broke if you don’t have clear financial goals you’re working towards.
I’m going to present a large number of high-yield investments, each with its own degree of risk. The purpose is to help you evaluate the risk/reward potential of these investments when selecting the ones that will be right for you.
If you’re looking for investments that are completely safe, you should favor one or more of the highly liquid, low-yield vehicles covered in Best Low-Risk Investments for 2023. In this article, we’re going to be going for something a little bit different. As such, please note that this is not in any way a blanket recommendation of any particular investment.
Best High-Yield Investments for 2023
Table of Contents
Below is my list of the 18 best high-yield investments for 2023. They’re not ranked or listed in order of importance. That’s because each is a unique investment class that you will need to carefully evaluate for suitability within your own portfolio.
Be sure that any investment you do choose will be likely to provide the return you expect at an acceptable risk level for your own personal risk tolerance.
1. Treasury Inflation-Protected Securities (TIPS)
Let’s start with this one, if only because it’s on just about every list of high-yield investments, especially in the current environment of rising inflation. It may not actually be the best high-yield investment, but it does have its virtues and shouldn’t be overlooked.
Basically, TIPS are securities issued by the U.S. Treasury that are designed to accommodate inflation. They do pay regular interest, though it’s typically lower than the rate paid on ordinary Treasury securities of similar terms. The bonds are available with a minimum investment of $100, in terms of five, 10, and 30 years. And since they’re fully backed by the U.S. government, you are assured of receiving the full principal value if you hold a security until maturity.
But the real benefit—and the primary advantage—of these securities is the inflation principal additions. Each year, the Treasury will add an amount to the bond principal that’s commensurate with changes in the Consumer Price Index (CPI).
Fortunately, while the principal will be added when the CPI rises (as it nearly always does), none will be deducted if the index goes negative.
You can purchase TIPS through the U.S. Treasury’s investment portal, Treasury Direct. You can also hold the securities as well as redeem them on the same platform. There are no commissions or fees when buying securities.
On the downside, TIPS are purely a play on inflation since the base rates are fairly low. And while the principal additions will keep you even with inflation, you should know that they are taxable in the year received.
Still, TIPS are an excellent low-risk, high-yield investment during times of rising inflation—like now.
2. I Bonds
If you’re looking for a true low-risk, high-yield investment, look no further than Series I bonds. With the current surge in inflation, these bonds have become incredibly popular, though they are limited.
I bonds are currently paying 6.89%. They can be purchased electronically in denominations as little as $25. However, you are limited to purchasing no more than $10,000 in I bonds per calendar year. Since they are issued by the U.S. Treasury, they’re fully protected by the U.S. government. You can purchase them through the Treasury Department’s investment portal, TreasuryDirect.gov.
“The cash in my savings account is on fire,” groans Scott Lieberman, Founder of Touchdown Money. “Inflation has my money in flames, each month incinerating more and more. To defend against this, I purchased an I bond. When I decide to get my money back, the I bond will have been protected against inflation by being worth more than what I bought it for. I highly recommend getting yourself a super safe Series I bond with money you can stash away for at least one year.”
You may not be able to put your entire bond portfolio into Series I bonds. But just a small investment, at nearly 10%, can increase the overall return on your bond allocation.
3. Corporate Bonds
The average rate of return on a bank savings account is 0.33%. The average rate on a money market account is 0.09%, and 0.25% on a 12-month CD.
Now, there are some banks paying higher rates, but generally only in the 1%-plus range.
If you want higher returns on your fixed income portfolio, and you’re willing to accept a moderate level of risk, you can invest in corporate bonds. Not only do they pay higher rates than banks, but you can lock in those higher rates for many years.
For example, the average current yield on a AAA-rated corporate bond is 4.55%. Now that’s the rate for AAA bonds, which are the highest-rated securities. You can get even higher rates on bonds with lower ratings, which we will cover in the next section.
Corporate bonds sell in face amounts of $1,000, though the price may be higher or lower depending on where interest rates are. If you choose to buy individual corporate bonds, expect to buy them in lots of ten. That means you’ll likely need to invest $10,000 in a single issue. Brokers will typically charge a small per-bond fee on purchase and sale.
An alternative may be to take advantage of corporate bond funds. That will give you an opportunity to invest in a portfolio of bonds for as little as the price of one share of an ETF. And because they are ETFs, they can usually be bought and sold commission free.
You can typically purchase corporate bonds and bond funds through popular stock brokers, like Zacks Trade, TD Ameritrade.
Corporate Bond Risk
Be aware that the value of corporate bonds, particularly those with maturities greater than 10 years, can fall if interest rates rise. Conversely, the value of the bonds can rise if interest rates fall.
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4. High-Yield Bonds
In the previous section we talked about how interest rates on corporate bonds vary based on each bond issue’s rating. A AAA bond, being the safest, has the lowest yield. But a riskier bond, such as one rated BBB, will provide a higher rate of return.
If you’re looking to earn higher interest than you can with investment-grade corporate bonds, you can get those returns with so-called high-yield bonds. Because they have a lower rating, they pay higher interest, sometimes much higher.
The average yield on high-yield bonds is 8.29%. But that’s just an average. The yield on a bond rated B will be higher than one rated BB.
You should also be aware that, in addition to potential market value declines due to rising interest rates, high-yield bonds are more likely to default than investment-grade bonds. That’s why they pay higher interest rates. (They used to call these bonds “junk bonds,” but that kind of description is a marketing disaster.) Because of those twin risks, junk bonds should occupy only a small corner of your fixed-income portfolio.
High Yield Bond Risk
In a rapidly rising interest rate environment, high-yield bonds are more likely to default.
High-yield bonds can be purchased under similar terms and in the same places where you can trade corporate bonds. There are also ETFs that specialize in high-yield bonds and will be a better choice for most investors, since they will include diversification across many different bond issues.
5. Municipal Bonds
Just as corporations and the U.S. Treasury issue bonds, so do state and local governments. These are referred to as municipal bonds. They work much like other bond types, particularly corporates. They can be purchased in similar denominations through online brokers.
The main advantage enjoyed by municipal bonds is their tax-exempt status for federal income tax purposes. And if you purchase a municipal bond issued by your home state, or a municipality within that state, the interest will also be tax-exempt for state income tax purposes.
That makes municipal bonds an excellent source of tax-exempt income in a nonretirement account. (Because retirement accounts are tax-sheltered, it makes little sense to include municipal bonds in those accounts.)
Municipal bond rates are currently hovering just above 3% for AAA-rated bonds. And while that’s an impressive return by itself, it masks an even higher yield.
Because of their tax-exempt status, the effective yield on municipal bonds will be higher than the note rate. For example, if your combined federal and state marginal income tax rates are 25%, the effective yield on a municipal bond paying 3% will be 4%. That gives an effective rate comparable with AAA-rated corporate bonds.
Municipal bonds, like other bonds, are subject to market value fluctuations due to interest rate changes. And while it’s rare, there have been occasional defaults on these bonds.
Like corporate bonds, municipal bonds carry ratings that affect the interest rates they pay. You can investigate bond ratings through sources like Standard & Poor’s, Moody’s, and Fitch.
Fund
Symbol
Type
Current Yield
5 Average Annual Return
Vanguard Inflation-Protected Securities Fund
VIPSX
TIPS
0.06%
3.02%
SPDR® Portfolio Interm Term Corp Bond ETF
SPIB
Corporate
4.38%
1.44%
iShares Interest Rate Hedged High Yield Bond ETF
HYGH
High-Yield
5.19%
2.02%
Invesco VRDO Tax-Free ETF (PVI)
PVI
Municipal
0.53%
0.56%
6. Longer Term Certificates of Deposit (CDs)
This is another investment that falls under the low risk/relatively high return classification. As interest rates have risen in recent months, rates have crept up on certificates of deposit. Unlike just one year ago, CDs now merit consideration.
But the key is to invest in certificates with longer terms.
“Another lower-risk option is to consider a Certificate of Deposit (CD),” advises Lance C. Steiner, CFP at Buckingham Advisors. “Banks, credit unions, and many other financial institutions offer CDs with maturities ranging from 6 months to 60 months. Currently, a 6-month CD may pay between 0.75% and 1.25% where a 24-month CD may pay between 2.20% and 3.00%. We suggest considering a short-term ladder since interest rates are expected to continue rising.” (Stated interest rates for the high-yield savings and CDs were obtained at bankrate.com.)
Most banks offer certificates of deposit with terms as long as five years. Those typically have the highest yields.
But the longer term does involve at least a moderate level of risk. If you invest in a CD for five years that’s currently paying 3%, the risk is that interest rates will continue rising. If they do, you’ll miss out on the higher returns available on newer certificates. But the risk is still low overall since the bank guarantees to repay 100% of your principle upon certificate maturity.
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7. Peer-to-Peer (P2P) Lending
Do you know how banks borrow from you—at 1% interest—then loan the same money to your neighbor at rates sometimes as high as 20%? It’s quite a racket, and a profitable one at that.
But do you also know that you have the same opportunity as a bank? It’s an investing process known as peer-to-peer lending, or P2P for short.
P2P lending essentially eliminates the bank. As an investor, you’ll provide the funds for borrowers on a P2P platform. Most of these loans will be in the form of personal loans for a variety of purposes. But some can also be business loans, medical loans, and for other more specific purposes.
As an investor/lender, you get to keep more of the interest rate return on those loans. You can invest easily through online P2P platforms.
One popular example is Prosper. They offer primarily personal loans in amounts ranging between $2,000 and $40,000. You can invest in small slivers of these loans, referred to as “notes.” Notes can be purchased for as little as $25.
That small denomination will make it possible to diversify your investment across many different loans. You can even choose the loans you will invest in based on borrower credit scores, income, loan terms, and purposes.
Prosper, which has managed $20 billion in P2P loans since 2005, claims a historical average return of 5.7%. That’s a high rate of return on what is essentially a fixed-income investment. But that’s because there exists the possibility of loss due to borrower default.
However, you can minimize the likelihood of default by carefully choosing borrower loan quality. That means focusing on borrowers with higher credit scores, incomes, and more conservative loan purposes (like debt consolidation).
8. Real Estate Investment Trusts (REITs)
REITs are an excellent way to participate in real estate investment, and the return it provides, without large amounts of capital or the need to manage properties. They’re publicly traded, closed-end investment funds that can be bought and sold on major stock exchanges. They invest primarily in commercial real estate, like office buildings, retail space, and large apartment complexes.
If you’re planning to invest in a REIT, you should be aware that there are three different types.
“Equity REITs purchase commercial, industrial, or residential real estate properties,” reports Robert R. Johnson, PhD, CFA, CAIA, Professor of Finance, Heider College of Business, Creighton University and co-author of several books, including The Tools and Techniques Of Investment Planning, Strategic Value Investing and Investment Banking for Dummies. “Income is derived primarily from the rental on the properties, as well as from the sale of properties that have increased in value. Mortgage REITs invest in property mortgages. The income is primarily from the interest they earn on the mortgage loans. Hybrid REITs invest both directly in property and in mortgages on properties.”
Johnson also cautions:
“Investors should understand that equity REITs are more like stocks and mortgage REITs are more like bonds. Hybrid REITs are like a mix of stocks and bonds.”
Mortgage REITs, in particular, are an excellent way to earn steady dividend income without being closely tied to the stock market.
Examples of specific REITs are listed in the table below (source: Kiplinger):
REIT
Equity or Mortgage
Property Type
Dividend Yield
12 Month Return
Rexford Industrial Realty
REXR
Industrial warehouse space
2.02%
2.21%
Sun Communities
SUI
Manufactured housing, RVs, resorts, marinas
2.19%
-14.71%
American Tower
AMT
Multi-tenant cell towers
2.13%
-9.00%
Prologis
PLD
Industrial real estate
2.49%
-0.77%
Camden Property Trust
CPT
Apartment complexes
2.77%
-7.74%
Alexandria Real Estate Equities
ARE
Research Properties
3.14%
-23.72%
Digital Realty Trust
DLR
Data centers
3.83%
-17.72%
9. Real Estate Crowdfunding
If you prefer direct investment in a property of your choice, rather than a portfolio, you can invest in real estate crowdfunding. You invest your money, but management of the property will be handled by professionals. With real estate crowdfunding, you can pick out individual properties, or invest in nonpublic REITs that invest in very specific portfolios.
One of the best examples of real estate crowdfunding is Fundrise. That’s because you can invest with as little as $500 or create a customized portfolio with no more than $1,000. Not only does Fundrise charge low fees, but they also have multiple investment options. You can start small in managed investments, and eventually trade up to investing in individual deals.
One thing to be aware of with real estate crowdfunding is that many require accredited investor status. That means being high income, high net worth, or both. If you are an accredited investor, you’ll have many more choices in the real estate crowdfunding space.
If you are not an accredited investor, that doesn’t mean you’ll be prevented from investing in this asset class. Part of the reason why Fundrise is so popular is that they don’t require accredited investor status. There are other real estate crowdfunding platforms that do the same.
Just be careful if you want to invest in real estate through real estate crowdfunding platforms. You will be expected to tie your money up for several years, and early redemption is often not possible. And like most investments, there is the possibility of losing some or all your investment principal.
Low minimum investment – $10
Diversified real estate portfolio
Portfolio Transparency
10. Physical Real Estate
We’ve talked about investing in real estate through REITs and real estate crowdfunding. But you can also invest directly in physical property, including residential property or even commercial.
Owning real estate outright means you have complete control over the investment. And since real estate is a large-dollar investment, the potential returns are also large.
For starters, average annual returns on real estate are impressive. They’re even comparable to stocks. Residential real estate has generated average returns of 10.6%, while commercial property has returned an average of 9.5%.
Next, real estate has the potential to generate income from two directions, from rental income and capital gains. But because of high property values in many markets around the country, it will be difficult to purchase real estate that will produce a positive cash flow, at least in the first few years.
Generally speaking, capital gains are where the richest returns come from. Property purchased today could double or even triple in 20 years, creating a huge windfall. And this will be a long-term capital gain, to get the benefit of a lower tax bite.
Finally, there’s the leverage factor. You can typically purchase an investment property with a 20% down payment. That means you can purchase a $500,000 property with $100,000 out-of-pocket.
By calculating your capital gains on your upfront investment, the returns are truly staggering. If the $500,000 property doubles to $1 million in 20 years, the $500,000 profit generated will produce a 500% gain on your $100,000 investment.
On the negative side, real estate is certainly a very long-term investment. It also comes with high transaction fees, often as high as 10% of the sale price. And not only will it require a large down payment up front, but also substantial investment of time managing the property.
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11. High Dividend Stocks
“The best high-yield investment is dividend stocks,” declares Harry Turner, Founder at The Sovereign Investor. “While there is no guaranteed return with stocks, over the long term stocks have outperformed other investments such as bonds and real estate. Among stocks, dividend-paying stocks have outperformed non-dividend paying stocks by more than 2 percentage points per year on average over the last century. In addition, dividend stocks tend to be less volatile than non-dividend paying stocks, meaning they are less likely to lose value in downturns.”
You can certainly invest in individual stocks that pay high dividends. But a less risky way to do it, and one that will avoid individual stock selection, is to invest through a fund.
One of the most popular is the ProShares S&P 500 Dividend Aristocrat ETF (NOBL). It has provided a return of 1.67% in the 12 months ending May 31, and an average of 12.33% per year since the fund began in October 2013. The fund currently has a 1.92% dividend yield.
The so-called Dividend Aristocrats are popular because they represent 60+ S&P 500 companies, with a history of increasing their dividends for at least the past 25 years.
“Dividend Stocks are an excellent way to earn some quality yield on your investments while simultaneously keeping inflation at bay,” advises Lyle Solomon, Principal Attorney at Oak View Law Group, one of the largest law firms in America. “Dividends are usually paid out by well-established and successful companies that no longer need to reinvest all of the profits back into the business.”
It gets better. “These companies and their stocks are safer to invest in owing to their stature, large customer base, and hold over the markets,” adds Solomon. “The best part about dividend stocks is that many of these companies increase dividends year on year.”
The table below shows some popular dividend-paying stocks. Each is a so-called “Dividend Aristocrat”, which means it’s part of the S&P 500 and has increased its dividend in each of at least the past 25 years.
Company
Symbol
Dividend
Dividend Yield
AbbVie
ABBV
$5.64
3.80%
Armcor PLC
AMCR
$0.48
3.81%
Chevron
CVX
$5.68
3.94%
ExxonMobil
XOM
$3.52
4.04%
IBM
IBM
$6.60
5.15%
Realty Income Corp
O
$2.97
4.16%
Walgreen Boots Alliance
WBA
$1.92
4.97%
12. Preferred Stocks
Preferred stocks are a very specific type of dividend stock. Just like common stock, preferred stock represents an interest in a publicly traded company. They’re often thought of as something of a hybrid between stocks and bonds because they contain elements of both.
Though common stocks can pay dividends, they don’t always. Preferred stocks on the other hand, always pay dividends. Those dividends can be either a fixed amount or based on a variable dividend formula. For example, a company can base the dividend payout on a recognized index, like the LIBOR (London Inter-Bank Offered Rate). The percentage of dividend payout will then change as the index rate does.
Preferred stocks have two major advantages over common stock. First, as “preferred” securities, they have a priority on dividend payments. A company is required to pay their preferred shareholders dividends ahead of common stockholders. Second, preferred stocks have higher dividend yields than common stocks in the same company.
You can purchase preferred stock through online brokers, some of which are listed under “Growth Stocks” below.
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Preferred Stock Caveats
The disadvantage of preferred stocks is that they don’t entitle the holder to vote in corporate elections. But some preferred stocks offer a conversion option. You can exchange your preferred shares for a specific number of common stock shares in the company. Since the conversion will likely be exercised when the price of the common shares takes a big jump, there’s the potential for large capital gains—in addition to the higher dividend.
Be aware that preferred stocks can also be callable. That means the company can authorize the repurchase of the stock at its discretion. Most will likely do that at a time when interest rates are falling, and they no longer want to pay a higher dividend on the preferred stock.
Preferred stock may also have a maturity date, which is typically 30–40 years after its original issuance. The company will typically redeem the shares at the original issue price, eliminating the possibility of capital gains.
Not all companies issue preferred stock. If you choose this investment, be sure it’s with a company that’s well-established and has strong financials. You should also pay close attention to the details of the issuance, including and especially any callability provisions, dividend formulas, and maturity dates.
13. Growth Stocks
This sector is likely the highest risk investment on this list. But it also may be the one with the highest yield, at least over the long term. That’s why we’re including it on this list.
Based on the S&P 500 index, stocks have returned an average of 10% per year for the past 50 years. But it is important to realize that’s only an average. The market may rise 40% one year, then fall 20% the next. To be successful with this investment, you must be committed for the long haul, up to and including several decades.
And because of the potential wide swings, growth stocks are not recommended for funds that will be needed within the next few years. In general, growth stocks work best for retirement plans. That’s where they’ll have the necessary decades to build and compound.
Since most of the return on growth stocks is from capital gains, you’ll get the benefit of lower long-term capital gains tax rates, at least with securities held in a taxable account. (The better news is capital gains on investments held in retirement accounts are tax-deferred until retirement.)
You can choose to invest in individual stocks, but that’s a fairly high-maintenance undertaking. A better way may be to simply invest in ETFs tied to popular indexes. For example, ETFs based on the S&P 500 are very popular among investors.
You can purchase growth stocks and growth stock ETFs commission free with brokers like M1 Finance, Zacks Trade, Wealthsimple.
14. Annuities
Annuities are something like creating your own private pension. It’s an investment contract you take with an insurance company, in which you invest a certain amount of money in exchange for a specific income stream. They can be an excellent source of high yields because the return is locked in by the contract.
Annuities come in many different varieties. Two major classifications are immediate and deferred annuities. As the name implies, immediate annuities begin paying an income stream shortly after the contract begins.
Deferred annuities work something like retirement plans. You may deposit a fixed amount of money with the insurance company upfront or make regular installments. In either case, income payments will begin at a specified point in the future.
With deferred annuities, the income earned within the plan is tax-deferred and paid upon withdrawal. But unlike retirement accounts, annuity contributions are not tax-deductible. Investment returns can either be fixed-rate or variable-rate, depending on the specific annuity setup.
While annuities are an excellent idea and concept, the wide variety of plans as well as the many insurance companies and agents offering them, make them a potential minefield. For example, many annuities are riddled with high fees and are subject to limited withdrawal options.
Because they contain so many moving parts, any annuity contracts you plan to enter into should be carefully reviewed. Pay close attention to all the details, including the small ones. It is, after all, a contract, and therefore legally binding. For that reason, you may want to have a potential annuity reviewed by an attorney before finalizing the deal.
15. Alternative Investments
Alternative investments cover a lot of territory. Examples include precious metals, commodities, private equity, art and collectibles, and digital assets. These fall more in the category of high risk/potential high reward, and you should proceed very carefully and with only the smallest slice of your portfolio.
To simplify the process of selecting alternative assets, you can invest through platforms such as Yieldstreet. With a single cash investment, you can invest in multiple alternatives.
“Investors can purchase real estate directly on Yieldstreet, through fractionalized investments in single deals,” offers Milind Mehere, Founder & Chief Executive Officer at Yieldstreet. “Investors can access private equity and private credit at high minimums by investing in a private market fund (think Blackstone or KKR, for instance). On Yieldstreet, they can have access to third-party funds at a fraction of the previously required minimums. Yieldstreet also offers venture capital (fractionalized) exposure directly. Buying a piece of blue-chip art can be expensive, and prohibitive for most investors, which is why Yieldstreet offers fractionalized assets to diversified art portfolios.”
Yieldstreet also provides access to digital asset investments, with the benefit of allocating to established professional funds, such as Pantera or Osprey Fund. The platform does not currently offer commodities but plans to do so in the future.
Access to wide array of alternative asset classes
Access to ultra-wealthy investments
Can invest for income or growth
Learn More Now
Alternative investments largely require thinking out-of-the-box. Some of the best investment opportunities are also the most unusual.
“The price of meat continues to rise, while agriculture remains a recession-proof investment as consumer demand for food is largely inelastic,” reports Chris Rawley, CEO of Harvest Returns, a platform for investing in private agriculture companies. “Consequently, investors are seeing solid returns from high-yield, grass-fed cattle notes.”
16. Interest Bearing Crypto Accounts
Though the primary appeal of investing in cryptocurrency has been the meteoric rises in price, now that the trend seems to be in reverse, the better play may be in interest-bearing crypto accounts. A select group of crypto exchanges pays high interest on your crypto balance.
One example is Gemini. Not only do they provide an opportunity to buy, sell, and store more than 100 cryptocurrencies—plus non-fungible tokens (NFTs)—but they are currently paying 8.05% APY on your crypto balance through Gemini Earn.
In another variation of being able to earn money on crypto, Crypto.com pays rewards of up to 14.5% on crypto held on the platform. That’s the maximum rate, as rewards vary by crypto. For example, rewards on Bitcoin and Ethereum are paid at 6%, while stablecoins can earn 8.5%.
It’s important to be aware that when investing in cryptocurrency, you will not enjoy the benefit of FDIC insurance. That means you can lose money on your investment. But that’s why crypto exchanges pay such high rates of return, whether it’s in the form of interest or rewards.
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17. Crypto Staking
Another way to play cryptocurrency is a process known as crypto staking. This is where the crypto exchange pays you a certain percentage as compensation or rewards for monitoring a specific cryptocurrency. This is not like crypto mining, which brings crypto into existence. Instead, you’ll participate in writing that particular blockchain and monitoring its security.
“Crypto staking is a concept wherein you can buy and lock a cryptocurrency in a protocol, and you will earn rewards for the amount and time you have locked the cryptocurrency,” reports Oak View Law Group’s Lyle Solomon.
“The big downside to staking crypto is the value of cryptocurrencies, in general, is extremely volatile, and the value of your staked crypto may reduce drastically,” Solomon continues, “However, you can stake stable currencies like USDC, which have their value pegged to the U.S. dollar, and would imply you earn staked rewards without a massive decrease in the value of your investment.”
Much like earning interest and rewards on crypto, staking takes place on crypto exchanges. Two exchanges that feature staking include Coinbase and Kraken. These are two of the largest crypto exchanges in the industry, and they provide a wide range of crypto opportunities, in addition to staking.
Invest in Startup Businesses and Companies
Have you ever heard the term “angel investor”? That’s a private investor, usually, a high net worth individual, who provides capital to small businesses, often startups. That capital is in the form of equity. The angel investor invests money in a small business, becomes a part owner of the company, and is entitled to a share of the company’s earnings.
In most cases, the angel investor acts as a silent partner. That means he or she receives dividend distributions on the equity invested but doesn’t actually get involved in the management of the company.
It’s a potentially lucrative investment opportunity because small businesses have a way of becoming big businesses. As they grow, both your equity and your income from the business also grow. And if the business ever goes public, you could be looking at a life-changing windfall!
Easy Ways to Invest in Startup Businesses
Mainvest is a simple, easy way to invest in small businesses. It’s an online investment platform where you can get access to returns as high as 25%, with an investment of just $100. Mainvest offers vetted businesses (the acceptance rate is just 5% of business that apply) for you to invest in.
It collects revenue, which will be paid to you quarterly. And because the minimum required investment is so small, you can invest in several small businesses at the same time. One of the big advantages with Mainvest is that you are not required to be an accredited investor.
Still another opportunity is through Fundrise Innovation Fund. I’ve already covered how Fundrise is an excellent real estate crowdfunding platform. But through their recently launched Innovaton Fund, you’ll have opportunity to invest in high-growth private technology companies. As a fund, you’ll invest in a portfolio of late-stage tech companies, as well as some public equities.
The purpose of the fund is to provide high growth, and the fund is currently offering shares with a net asset value of $10. These are long-term investments, so you should expect to remain invested for at least five years. But you may receive dividends in the meantime.
Like Mainvest, the Fundrise Innovation Fund does not require you to be an accredited investor.
Low minimum investment – $10
Diversified real estate portfolio
Portfolio Transparency
Final Thoughts on High Yield Investing
Notice that I’ve included a mix of investments based on a combination of risk and return. The greater the risk associated with the investment, the higher the stated or expected return will be.
It’s important when choosing any of these investments that you thoroughly assess the risk involved with each, and not focus primarily on return. These are not 100% safe investments, like short-term CDs, short-term Treasury securities, savings accounts, or bank money market accounts.
Because there is risk associated with each, most are not suitable as short-term investments. They make most sense for long-term investment accounts, particularly retirement accounts.
For example, growth stocks—and most stocks, for that matter—should generally be in a retirement account. While there will be years when you will suffer losses in your position, you’ll have enough years to offset those losses between now and retirement.
Also, if you don’t understand any of the above investments, it will be best to avoid making them. And for more complicated investments, like annuities, you should consult with a professional to evaluate the suitability and all the provisions it contains.
FAQ’s on High Yield Investment Options
What investment has the highest yield?
The investment with the highest yield will vary depending on a number of factors, including current market conditions and the amount of risk an investor is willing to take on. Generally speaking, investments with the potential for high yields also come with a higher level of risk, so it’s important for investors to carefully consider their options and choose investments that align with their financial goals and risk tolerance.
Some examples of high-yield investments include:
1. Stocks: Some stocks may offer high dividend yields, which is the annual dividend payment a company makes to its shareholders, expressed as a percentage of the stock’s current market price.
2. Real estate: Investing in real estate, either directly by purchasing property or indirectly through a real estate investment trust (REIT), can potentially generate high returns in the form of rental income and appreciation of the property value.
3. High-yield bonds: High-yield bonds, also known as junk bonds, are bonds that are issued by companies with lower credit ratings and thus offer higher yields to compensate for the added risk.
4. Private lending: Investing in private loans, such as through peer-to-peer lending platforms, can potentially offer high yields, but it also carries a higher level of risk.
5. Commodities: Investing in commodities, such as precious metals or oil, can potentially generate high returns if the prices of those commodities rise. However, the prices of commodities can also be volatile and subject to market fluctuations.
It’s important to note that these are just examples and not recommendations. As with any investment, it’s crucial to carefully research and consider all the potential risks and rewards before making a decision.
Where can I invest my money to get high returns?
There are a number of places you can invest your money to get high returns. One option is to invest in stocks, which typically offer higher returns than other investment options. Another option is to invest in bonds, which are considered a relatively safe investment option.
You could also invest in real estate, which has the potential to provide high returns if done correctly. Finally, you could also invest in commodities, such as gold or silver, which can be a risky investment but can also offer high returns.
What investments can I make a 10% return?
It’s difficult to predict exactly what investments will generate a 10% return, as investment returns can vary depending on a number of factors, including market conditions and the performance of the specific investment. Some investments, such as stocks and real estate, have the potential to generate returns in excess of 10%, but they also come with a higher level of risk. It’s important to remember that past performance is not necessarily indicative of future results, and that all investments carry some degree of risk
One of the most magnificent mansions in all of California, Hearst Castle has a rich history that captivates audiences just as much as its striking architecture.
Built more than a quarter mile above the Pacific Ocean, the California castle that was formerly known as La Cuesta Encantada (Spanish for The Enchanted Hill), is a historic estate in San Simeon, Calif.
Perched on a hill halfway between San Francisco and Los Angeles along the Central Coast of California, Hearst Castle was originally built as a private home for publishing tycoon William Randolph Hearst.
Hearst, who was one of the wealthiest people alive at the time, is said to have been the inspiration for Orson Welles’ iconic Citizen Kane movie — whose protagonist lived in “the world’s largest private estate,” called Xanadu.
While Welles’ portrayal of Hearst was less than favorable, Xanadu — a name inspired by the ancient city of Xanadu, known for its splendor, and later picked up by Bill Gates as a moniker for his longtime home near Seattle, WA — captured the grandeur of the publishing magnate’s palatial estate.
Now, one century after W.R. Hearst started building his opulent home, Hearst Castle is registered as a National Historic Landmark and California Historical Landmark — and is welcoming visitors who want to revel in its illustrious past.
So we thought we’d delve into the storied history of one of the grandest private homes ever built in the Golden State.
The history of Hearst Castle
Construction of Hearst Castle took nearly thirty years, from 1919 until 1947.
Conceived by publishing magnate William Randolph Hearst and his trusted architect Julia Morgan, Hearst Castle would become a mansion worthy of one of the wealthiest men alive at the time (named Casa Grande).
The main estate was surrounded by three guesthouses (called Casa del Mar, Casa del Monte and Casa del Sol).
But the property traces its history all the way back to 1865, when William Randolph Hearst’s father George Hearst purchased the original forty thousand acre estate and Camp Hill, the site for the future castle.
In 1919, William Randolph Hearst inherited $11 million and the family’s estates — including the land where his future castle would sit on.
With his fortune, Hearst created a publishing empire of newspapers, magazines and radio stations.
To this day, the Hearst family remains involved in the ownership of Hearst Communications. Some of their common-day magazines include ELLE, Cosmopolitan, Good Housekeeping, O, the Oprah Magazine,and Men’s Health, as well as newspapers such as San Francisco Chronicle and The Advocate, and websites such as Delish.com and BestProducts.com.
But, back to the castle.
Due to the popularity of his publishing empire, Hearst was financially able to build his dream house. And with the help of “America’s first truly independent female architect,” Hearst and Julia Morgan began dreaming up Hearst Castle.
Morgan was a pioneer.
The first woman to study architecture at the School of Beaux-Arts in Paris and the first to have her own architectural practice in California, she was also the first female winner of the American Institute of Architects Gold Medal.
For over twenty years, Hearst and Morgan collaborated as close friends and business equals on the grand castle, making it her most well-known creation.
Hearst Castle’s many rooms and endless amenities
The end result was beyond spectacular: when it was finally completed, the Hearst estate had a total of 42 bedrooms, 61 bathrooms, and 19 sitting rooms.
The sprawling grounds of the castle spanned 127 acres, encompassing gardens, indoor and outdoor swimming pools, tennis courts, its own private theater (a rarity back in the day), and an airfield.
The pools alone are so magnificent they’d warrant a visit to the castle just to revel in their beauty.
The Roman Pool — the castle’s indoor pool — was built to mimic an ancient Roman bath.
Featuring shimmery glass mosaic tiles inspired by the Mausoleum of Galla Placidia in Ravenna, Italy (created by British muralist Camille Solon, according to Architectural Digest), the pool resembles a mesmerizing sea of blue and gold.
The outdoor Neptune Pool — which has its own Wikipedia page — was built and rebuilt three times, each version a larger size.
In its now final form, the pool is 104 feet long, surrounded by Ancient Roman Revival and Greek Revival style pavilions and colonnades with 17th-century bas-reliefs.
During Hearst’s lifetime, the property was also home to the world’s private zoo.
Even today, visitors who tour the castle are taken aback by its grandeur.
A tour of the grand rooms of the Hearst Castle will have you walking 2 to 3 miles to visit just the essential places, like the Assembly Room, Refectory, Morning Room, Billiard Room and Theater. But the effort would be worth it, as you’d be stepping in the footprints of some the most well-known people of the 20th century.
Who lived (and socialized) at Hearst Castle?
Hearst Castle was originally built as a family home for Hearst, his wife, vaudeville performer Millicent Willson, and their five sons.
But after years of Hearst’s longtime affair with actress Marion Davies, the couple separated.
With Millicent out of the picture, Davies moved into the castle and the couple hosted A-list parties with some of Hollywood’s elite stars, including Charlie Chaplin, Cary Grant, the Marx Brothers, Mary Pickford, Jean Harlow, Greta Garbo, Buster Keaton and Clark Gable, to name just a few.
Politicians such as US President Calvin Coolidge and British Prime Minister Winston Churchill, as well as other notables including Charles Lindbergh, P. G. Wodehouse, and Bernard Shaw were also guests at the castle.
Typically, guests gathered at Casa Grande for beverages in the Assembly Room and dinner in the Refectory.
During the day, guests were left to fend for themselves and enjoy the elaborate grounds. They played tennis, went horseback riding, and played croquet or golf while enjoying the views.
Of course, everyone packed their swim trunks for a dip in the outdoor pool. And in the evening, guests watched the latest Hollywood films in the private theatre before retiring to the luxurious accommodations provided by the guest houses of Casa del Mar, Casa del Monte, and Casa del Sol.
None other than Charlie Chaplin once commented on the impeccable hospitality he experienced at Hearst Castle.
“Dinners were elaborate, pheasant, wild duck, partridge and venison,” Chaplin reportedly said. “[Yet served] amidst the opulence, we were served paper napkins, it was only when Mrs. Hearst was in residence that the guests were given linen ones.”
During the elaborate social gatherings, Morgan continued to build the castle until its completion in 1947.
Hearst died in 1951 at the age of 88.
What happened to the castle after Hearst’s death?
As they say, all good things must come to an end.
After Hearst’s death, his longtime lover, Marion Davies (who was excluded from his funeral) was forced to move out.
And his trusted architect and close friend, Julia Morgan, closed her San Francisco office after a successful 42-year career and reportedly became a virtual recluse until her death in 1957.
In 1958, the Hearst Corporation donated Hearst Castle — including the gardens and most of its contents — to the state of California.
That same year, Hearst Castle was opened to the public for the first time.
In 1972, Hearst Castle was added to the National Register of Historic Places, and in 1976 it became a United States National Historic Landmark.
Currently, at Hearst Castle…
You’d think Hearst Castle would be a hot location for Hollywood films.
However, commercial filming at the castle is rare. Since 1957, only two big projects have been granted permission to film here.
In 1960, Stanley Kubrick’s film Spartacus used the castle to stand in as Crassus’ villa, and in 2014, Lady Gaga‘s music video for G.U.Y. was filmed at the Neptune and Roman Pools.
Since its opening in 1958, Hearst Castle has become a major California tourist attraction, attracting crowds of close to one million people every year.
Who owns Hearst Castle?
While the Hearst family maintains a connection with the castle, the estate is now a historical landmark owned and operated by the California State Park system.
In 2019, socialite Amanda Hearst, W. R. Hearst’s great-granddaughter, married Norwegian film director Joachim Rønning at the castle (which was closed to the public only for that one day).
But the castle is now a museum open to the public as a California State Park and registered as a National Historic Landmark and California Historical Landmark.
And it’s quite a spectacular spot.
From a north-facing terrace, visitors can look out into the Santa Lucia Mountains and as far as Junipero Serra Peak.
Not to mention the art.
There are four original 16th-century tapestries from the Deeds of Scipio Africanus series hanging on the walls of the Assembly Room, CNN reports.
With most of the original objects on display, Hearst Castle is a magnificent museum not to be missed if you’re in the San Simeon area.
And if you happen to be planning a visit to San Simeon, with the Hearst Castle as the main attraction, here’s a handy map with all your accommodation options nearby:
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How to build a CD ladder? It’s a great question — unless you have no idea what a CD “ladder” even is. Let’s start at the beginning. A CD ladder is a method of staggering the maturity dates of certificates of deposits so you can invest your money safely and still keep some of it easily available for emergencies.
The Federal Deposit Insurance Corporation (FDIC) insures certificates of deposit (or time deposits) just like they insure savings accounts — so they are just as safe.
However, CD rates are higher than a savings account rates because of the reduced liquidity — you have to tie up your money for a period of three months to six years. Of course, these being the dog days of quantitative easing, those higher CD rates can still be counted on very few fingers of a single hand.
And so you wonder: Could there be a way around that, a way to capture a higher CD rate without having your money in a prison cell for which they have thrown away the key? The CD ladder is the way around that liquidity problem.
The Ladder’s Interesting History
The concept of laddering originated in the arena of bond investing. (In case you are wondering, more money worldwide is invested in bonds than any other investment vehicle, and it isn’t even close.)
Related >> Todays CD Rates
Each bond has a fixed maturity date. (A bond is simply a loan, for which interest is paid quarterly and the original principal gets repaid in a lump sum at some point in the future, called the maturity date.)
As an example, IBM Corporation has 10 different bonds outstanding today, maturing in September 2017, February 2018, October 2018, and so forth, all the way up to November 2025. As a bond investor, you would receive an interest check every quarter, but you wouldn’t get your money back until that bond’s specific maturity date.
You can sell your bonds on the open market, pretty much like mutual funds and stocks, only the process is not nearly as efficient (or cheap), and the amount you get from the sale may be far different from the maturity amount.
Bond investors, therefore, developed a strategy called laddering or layering. In a nutshell, laddering involves buying bonds with staggered maturity dates. This strategy gives you a steady stream of maturing bonds rather than a single, big sum tied up until some date far into the future.
Well, in some ways, certificates of deposit (CDs) function like bonds held to maturity and, therefore, it is no surprise that laddering became a viable strategy to help maintain some access to the amounts on deposit in CD investments as well.
The Benefits of Laddering CDs
Why has laddering become such an established strategy to invest in bonds, CDs and other investments with fixed interest rates and fixed maturity dates? Here are some of the benefits:
1. Great liquidity: Once you are up and running (explained more in the example below) you will have investments maturing on an evenly spread out timeline. That eliminates the dilemma of not being able to get at your money should something unforeseen happen. Should you not need the money, you simply “roll over” the investment, tacking the money back on the end of the ladder, so to speak.
2. Higher return: You get higher CD rates the longer you are willing to tie up your money. With a ladder, you will end up having a string of max term/max yield CDs, which still mature each quarter (or whichever period you choose to have them mature).
Great flexibility and great returns — relatively speaking, of course — how can you beat that?
In addition, there is another subtle benefit CD ladders offer:
3. Coverage against interest rate risk: If there is one thing you know by now, it’s that CD rates fluctuate constantly. They never stay the same. In a climate of dropping interest rates, staggering the maturity dates of your CDs will protect you by allowing you to capture interest rates on your rollovers before they reach the low point of your last rollover. Likewise, when interest rates start rising again, you won’t have to miss out while your investment is stuck in a single, low-interest-rate CD.
An Example of How to Ladder CDs
Let’s say you have $20,000 to invest and you decide you want to have access to some of the money once a quarter, at which time you have the option of withdrawing it with no penalty or rolling it over into another CD.
You can choose the maturity date (sometimes referred to as a liquidity event) of a certificate of deposit. They are typically offered in three-, six- and nine-month maturities, followed by one-, three- and five-year maturities. The longer the period, the higher the yield. A three-month CD might yield 0.3 percent while a five-year CD may yield 2.0 percent. The difference between these maturities is the price you pay for the liquidity you want. (CD rates change all the time, so the numbers used in the example might be different for you. However, the relationship between the various numbers generally holds true, no matter the prevailing rates. Therefore, consider the rates in the example in relative, rather than absolute, terms.)
Option A: Unladdered CDs
If you want the benefit of a quarterly liquidity event, your first instinct may be to simply open a three-month CD for the total amount. Then, every quarter, when the CD matures, you reinvest it (roll it over). In this example, your yield would be 0.3 percent per year, or $15 per quarter, $60 per year, and $300 over a five-year period.
Option B: Laddered CDs
To start a CD ladder, you would invest $1,000 in a five-year CD and deposit the remaining $19,000 in a three-month CD.
At the end of the first quarter, you would invest $1,000 in the second five-year CD and roll over the remaining $18,000 for another quarter.
At the end of the next quarter, you would take another $1,000 and put it in another five-year CD and roll over the rest.
You continue with that until the 20th quarter, when all $20,000 will be invested in 20 different CDs, all with the maximum (five-year) maturity.
At the end of the 21st quarter, the very first five-year CD will mature, and you would have the choice to withdraw or roll over the money into another five-year CD.
From then on, you will be earning the maximum CD return on every one of your 20 CDs — and you will still have $1,000 maturing every quarter.
Comparing Your Options
Using the numbers in the example, Option A will earn $300 in interest over the first five years, while Option B (the ladder) will earn just under $1,200 — almost four times that amount!
This is a simple example. You could make the difference even greater by investing some of your money in intermediate term CDs while you wait for those amounts to be invested in their proper “rungs” of the ladder, but that complicates the calculation without changing the point. The improvement laddering offers over simple CD investing depends on how frequently you need a liquidity event. (The longer you can wait, the less of a difference you would get.)
The underlying point remains the same, though: Laddering your CDs can offer significantly better returns than simple CD investing.
Do you use certificates of deposit as a safe investment? Do you use a CD ladder to profit from interest-rate fluctuations?
By Contributing Author8 Comments – The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited August 24, 2012.
Have you refinanced your mortgage in the past year or so? If you haven’t refinanced yet, are you thinking about doing it? If so, you may want to get started now, and here’s why…
Rates Are At All-Time Lows
Mortgage rates are currently at the lowest levels in recorded history. If you’re waiting for better rates, they may never get better than they are right now. It isn’t that they couldn’t go lower—they can. But the historic expected return on long-term fixed investments is 3 percent, plus an allowance for risk (default).
Since 30 year fixed rate mortgages are only a little above three percent now, the chance of it going any lower is remote. And if it did, it would only drop fractionally. At these levels, rates will no longer drop by full percentage points—they’re already too close to the ground.
The flip side of a rate move is that there’s plenty of room for mortgage rates to rise. At such low levels as now they may drop fractionally, but they can very easily move up in whole percentage points and maybe even a few of them.
Right now, a lot of people are sitting with 5-6% mortgage rates wondering if they should refinance now. With rates below 4% refinancing makes sense. But an upward move of just 1% would effectively close the refinance window and possibly for a long time.
Advantages Of Refinancing
Most often, when homeowners refinance their mortgages they do it to lower their payments. That’s a good enough reason by itself, after all, the less money you have to pay on your monthly mortgage payment, the more you have available for everything else.
But lower interest rates even by themselves may be a compelling reason to refinance, even if they don’t result in a radically lower monthly payment.
A lower interest rate means less of your monthly house payment is going toward interest, and that’s important because interest is a pure expense. A lower rate also means that more of the payment is going toward principal, and that’s equally important because principal builds home equity—and that’s an asset.
Take Advantage Of Low Rates To Pay Off Your Mortgage Sooner
One of the advantages that refinancing to a lower rate provides is an increased ability to pay off your mortgage faster. We just touched on how lower rates translate into more of your monthly payment going to principal reduction, but that’s just the start of what can be done.
If you can combine the lower rate with a shorter loan term, you can cut years off your mortgage. But a lower monthly payment can also enable you to make additional principal payments that will also shorten your loan term.
Let’s say that in refinancing you lower your monthly payment by $150 per month; if instead of settling comfortably into the new, lower payment you continue making the old payment amount. All of the additional $150 will go into principal reduction. That will take at least a few years off your mortgage.
How To Avoid The Biggest Refinance Mistake
If your plan is to payoff your mortgage faster as a result of the refinance, there’s one common trap that you want to avoid.
Many homeowners, anxious to lower their monthly house payment, recast the new loan back to the original term. If they have 25 years remaining on a 30 year mortgage, they refinance the new loan as a 30 year term as well. With that action, they’re back to square one on their mortgage—30 years to go.
They’ve effectively converted their mortgage into a 35 year loan—30 years for the new loan plus the five years they’ve already paid on the old one. That will have the exact opposite effect on paying off your mortgage faster.
If you do refinance, be sure that the term of your new mortgage does not exceed the remaining term of the current mortgage. If you started with a 30 year loan, and have 20 years remaining, your new mortgage should be 20 years, not 30.
Are you thinking of refinancing your mortgage? What’s keeping you from doing it now?
Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids and can be followed on Twitter at @OutOfYourRut.
If you’re a Netflix fanatic like us, you’ve probably binged shows like Selling Sunset or The Real Housewives of Beverly Hills, meaning you already have an idea of what life is like in sunny Los Angeles — and its ritziest surroundings.
The truth is, Cali living is just about as glamorous as you’re imagining. Just by walking on the streets of L.A., you’re bound to bump into Hollywood celebrities at some point in the week — and there’s no place with bigger odds for celeb spottings than Beverly Hills.
Biggest celebrities living in Beverly Hills, California
If you’ve ever wondered what celebrities live in Beverly Hills, we’re here to solve that mystery for you. Because it’s not just housewives who live here if you know what we mean (we’re looking at you, RHOBH fans).
Some of the most famous people in the world reside in Beverly Hills, and we’re about to give you a run-down of our favorites.
After a little bit of real estate detective work, we’ve compiled a list of celebrities who live in Beverly Hills at the moment – they do tend to move around a lot. If you’re planning a visit and are thinking of taking a tour of celebrity homes in Beverly Hills, then make sure these next Hollywood stars — and power couples — are on your list.
John Legend and Chrissy Teigen
Celeb power couple John Legend and Chrissy Teigen paid $14.1 million to buy Rihanna’s former home in Beverly Hills back in 2016. The couple and their two children made the most of their stunning home during Covid19 lockdown and shared jaw-dropping images of the family hanging out at the property.
But the couple was soon ready for a change, and they listed their long-time home for close to $24 million in the summer of 2020. They found their new dream home pretty quickly, and it was another Beverly Hills gem that cost them $17.5 million – a price worth paying for the zip code alone (90210).
The couple’s new home features 6 bedrooms, 9 bathrooms, a 10,700-square-foot open floor plan, and 24-foot ceilings. They also get panoramic city-to-sea views from almost every corner of the house – a pretty nice upgrade, if you ask us.
SEE INSIDE: Chrissy Teigen and John Legend’s house, a Beverly Hills trophy home
Ashton Kutcher and Mila Kunis
A sporadic Shark Tank host and savvy investor, Ashton Kutcher knows how to wisely invest his growing fortunes. And it’s no surprise that the former That 70s Show actor, along with his equally (if not more) talented wife joined the ranks of celebrities living in Beverly Hills.
Mila Kunis and Ashton Kutcher live in a striking hilltop farmhouse that overlooks the rest of Beverly Hills. The two have taken the farmhouse life seriously and set out to turn their million-dollar property into a fully sustainable farm.
Fun fact: Ashton Kutcher (@aplusk) and Mila Kunis have the sustainable L.A. farmhouse of your dreams (and ours, too, for the record).
The design-obsessed couple gave us a tour of their six-acre property for the cover of our June issue: https://t.co/DDOzrGEiSr pic.twitter.com/5LS1WPYu7c
— Architectural Digest (@ArchDigest) May 18, 2021
KuKu Farms, as the couple lovingly call their homestead, now features a well — that irritates the land — and a corn field, on top of a sprawling garden full of squash, tomatoes, lettuces, and more.
But don’t let that fool you into thinking the property is a rural farmstead. In fact, it’s one of the most beautiful celebrity homes in Beverly Hills, proving that style and sustainability are not mutually exclusive.
Jack Nicholson
Jack Nicholson owns many properties across the country, but his long-time residence is located in Beverly Hills, on the notorious Mulholland Drive.
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The multiple Academy Award winner is a veteran Beverly Hills celebrity resident, having first bought his property in 1969, purchasing additional parcels over the years to expand its footprint. He even bought Marlon Brando’s former neighboring home in 2005, razed it, and had it rebuilt.
Nicholson’s Beverly Hills home is also famous for darker reasons. It’s here that director Roman Polanski reportedly abused an underage girl, while Nicholson and his then-girlfriend Anjelica Houston were away.
The original house that used to stand on the site burned down, and various other incidents took place on Mulholland Drive, leading some to claim that the entire area is cursed. Maybe that’s what inspired David Lynch to make a movie about it.
Taylor Swift
Taylor Swift’s Beverly Hills abode is in a league of its own. The singer paid $25 million for movie mogul Samuel Goldwyn’s home back in 2015 — yeah, that Goldwin, you know, of Metro Goldwyn Mayer?
Swift’s mansion was actually granted landmark status in 2017, which means the young musician now owns a piece of Hollywood history. The property has never before been owned by someone not part of the Goldwyn family, so Swift is also writing history, if you think about it.
The 10,982-square-foot mansion is to be restored to its former glory, with the approval of the Beverly Hills City Council, of course.
The singer also owns a sprawling house in Rhode Island, which got a shout-out on her 2020 album, Folklore, with the song The Last Great American Dynasty paying tribute to the wealthy (and eccentric) socialite that owned the house before her.
SEE ALSO: Taylor Swift’s Holiday House — Home to “the Last Great American Dynasty”
Adele
Grammy-winner Adele is another Brit who has a thing for California living. The singer purchased her first home in Beverly Hills in 2016 for $9.5 million, and her second in 2018, after splitting from husband Simpon Konecki.
She didn’t venture very far to find her second home, though, as the two properties are across the street from each other. Adele’s second Beverly Hills abode cost her $10.65 million and was built back in 1961 in the gated community of Hidden Valley. It was previously owned by film producer Michael Hertzberg, according to the L.A. Times.
But the singer didn’t stop there.
Adele added another stunner to her real estate portfolio in 2022, when she shelled out $58 million for a property previously owned by Sylvester Stallone.
Adele’s sprawling mansion boasts the iconic 91210 zip code and is located in Beverly Park, which is still pretty close to Beverly Hills if you ask us. The new luxurious estate is now her home base, although she continues to own several properties in Beverly Hills.
SEE INSIDE: Adele’s house in Beverly Park, the $58M ‘house that Rocky built’
Sandra Bullock
Actress Sandra Bullock is also part of the elite group of Hollywood stars who reside in Beverly Hills. Our beloved Miss Congeniality paid $16.9 million in 2011 for a seven-bedroom mansion right next door to Ricky Martin.
Bullock also used to own a 3,153-square-foot home right above the Chateau Marmont on the Sunset Strip, which she rented out for a whopping $18,500 per month. She reportedly had enough of her role as landlord and sold that property in 2018.
An avid real estate investor and collector, Bullock has an impressive real estate portfolio to her name. While her current home base is in New Orleans, Louisiana, Bullock also spends time at her residences in Beverly Hills, Malibu, Austin, and New York City, to name just a few.
In early 2021, the actress paid $2.7 million for a 1946-built bungalow nestled in the mountains above Beverly Hills. The multi-acre property features 3 bedrooms, 3.5 bathrooms, a swimming pool with a waterfall, and gorgeous views. The Hollywood actress likes to keep her personal life private, so there’s no telling how much time she gets to spend at each of her various properties.
Jennifer Lawrence
Hunger Games star and Hollywood darling Jennifer Lawrence moved into her gorgeous Beverly Hills home back in 2014. The luxurious five-bedroom home came with a price tag of over $8 million, and an impressive list of previous homeowners, which includes Jessica Simpson and, shocker, Ellen DeGeneres.
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The property boasts a romantic, European-inspired vibe, which you might not have expected from a strong personality such as Lawrence. The actress enjoys beautifully landscaped grounds, a koi pond, a swimming pool, and even a home gym. No wonder she’s in such good shape.
Nicole Kidman and Keith Urban
Actress Nicole Kidman and her husband, country singer Keith Urban purchased their current Beverly Hills residence in 2008 for roughly $4.7 million, adding to their already heavy portfolio of real estate.
Since the acquisition, Kidman and Urban upgraded the property to include fun amenities for their children, including a jungle gym, a pool slide, and a chic cabana.
Their main residence is still in Nashville, but they own properties across the U.S., and their Beverly Hills mansion is reportedly one of their favorites. We say reportedly, because the couple is very private, and not much is known about their whereabouts. Even the interior of their Beverly Hills home remains a mystery, but we can safely suspect that it’s nothing short of glamorous.
Jason Statham and Rosie Huntington Whiteley
Next up on our list of Beverly Hills A-listers is probably the most good-looking couple on the planet. British movie star Jason Statham and supermodel Rosie Huntington-Whiteley settled in Beverly Hills in 2015, when they paid $13 million for a stunning five-bedroom mansion.
Their incredibly beautiful home was designed by Jenni Kayne, and is a perfect mix of contemporary architecture and timeless elegance. We wouldn’t have expected any less from the Victoria’s Secret model, as her taste is always impeccable.
You can take a peek inside the couple’s Beverly Hills mansion by watching Vogue’s 73 Questions With Rosie Huntington-Whiteley video:
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Not to mention that Statham is a passionate houseflipper. The couple and their young son spent lockdown at their modern mansion, where Rosie even filmed several Youtube videos sharing her beauty and style tips.
Kendall Jenner
Kendall Jenner’s art-filled Beverly Hills home is so gorgeous that it was even featured in Architectural Digest. The supermodel gave us all a sneak peek inside her sprawling, $8.55 million Mulholland Estates home that was once owned by Hollywood bad boy Charlie Sheen.
Jenner purchased the house back in 2017, and she listed a team of experts to help her redesign it to her heart’s desire. The result is a cozy, serene, and quiet escape from Jenner’s busy daily life, and a perfect retreat away from the prying eyes of the media.
The 6,625-square-foot home features meditation corners, a peaceful backyard, and an art studio where Jenner gets to unleash her creativity.
SEE ALSO: Keeping Up With the Incredible Homes of the Kardashians – the 2023 edition
Jeff Bezos
Amazon CEO Jeff Bezos is another celebrity with an impressive real estate portfolio under their belt. But this one is on an entirely different level, because Bezos owns the most expensive property in Beverly Hills, and probably one of the priciest in California.
Bezos paid a whopping $165 million for the Jack Warner Estate, previously owned by David Geffen, in early 2020. It was a record sale for a private residence in Los Angeles County, and one of the priciest residential sales in the country.
The Warner Estate was built back in the 1930s and is a one-of-a-kind historic gem worthy of Great Gatsby-style parties. Since purchasing the luxurious mansion, Bezos invested heavily in upgrades, adding a pool house, a powder room, and more high-end amenities.
Lizzo
In October 2022, acclaimed singer and songwriter Lizzo paid $15 million to snag Harry Styles’ former luxury mansion in Beverly Hills. The house was built in 2019 and boasts the legendary 91210 zip code, as well as 5,300 square feet of living space, 3 bedrooms, and 4 bathrooms.
Nestled in a private, gated community perched in the mountains atop Beverly Hills, Lizzo’s new home was owned by singer Harry Styles from 2014 to 2016. Since then, the property was remodeled and upgraded to meet the needs of modern A-list buyers like Lizzo.
The musician has not been shy about showing off her new digs, posting content on social media of her enjoying her stunning home theater or gorgeous infinity pool.
Rihanna and A$AP Rocky
Rihanna made the news rounds in 2023 after headlining the Super Bowl halftime show, reaching another level of awesomeness in her career. Luckily, she’s got quite a few luxury properties to retreat to and unwind after an adrenaline-driven show.
The singer boasts quite an extensive real estate portfolio, splitting her time between her properties in Beverly Hills, Century City, the Hollywood Hills, and Barbados.
Rihanna had a busy year in 2020, purchasing a five-bedroom mansion in Beverly Hills’ 91210 zip code for $13.8 million. Just months later, she paid $10 million for another four-bedroom mansion right next door. This investment might be a sign that this is where the singer and her partner, Asap Rocky, plan to settle down and raise their growing family.
The 7,600-square-foot home was built in 1938 and features 5 bedrooms, 7 bathrooms, huge walk-in closets, marble bathrooms, large private terraces, and stunning views. But above everything, the property offers privacy from the inquisitive eyes of the paparazzi.
Who knows, the house next door could house a recording studio, additional security and staff, or more baby rooms!
SEE INSIDE: Rihanna’s house in Beverly Hills
These are just some of our favorite celebrities who live in Beverly Hills. This eclectic enclave is a magnet for Hollywood stars, so the list could go on and on, but we’ll stop here – for now. Stay tuned for more celebrity-related real estate coverage on Fancy Pants Homes!
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