Special Payments Checks-What to do with them?
July 1st marks the arrival of the Secondary Markets checks. Many people have asked me what is the best way to handle these funds. Here are a few ideas:
1. Make it last a whole year:
Take net amount of the check and divide it by 12 (months). Deposit the entire check into an account that allows automatic monthly disbursements.
Set the monthly disbursement to 1/12th the amount of the net check, to be deposited into your checking account on the first of every month. You will have a monthly income for the rest of the year with this method.
2. Make monthly interest by purchasing T-Bills.
For example, if you want to earn interest on the monthly disbursements, you can buy T-Bills that mature in varying intervals, allowing you to have access to cash on a monthly basis.
T-Bills are considered risk free because they are backed by the US Government. You can buy T-Bills without commission at various places, including TD Ameritrade, and directly from the US Treasury. If you have an investment account at TD, your advisor can buy T-Bills for you at no charge.
You can “ladder” the T-Bills to mature regularly to provide the same monthly income as in #1 above, but with some added interest. There are other interest bearing instruments, too.
3. Invest part of the check
If you think there is a portion of the check you will not need for living expenses, you could designate an amount to be invested in a long term growth portfolio of commission free and no load index funds and ETF’s. Long term portfolios, if properly allocated, can grow your assets over time. An investment advisor can help you set this up.
There are other ways to handle the Secondary Markets check, too. If you’d like advice on what might be good options for you, please feel free to call me at 818-679-2891, or email me at firstname.lastname@example.org.
Plectrum Advisers LLC
Registered Investment Advisor
Photos by Dan Goldwasser/ScoringSessions.com
The information in this article is for informational purposes only and does not constitute financial, accounting, or legal advice.
Plectrum Advisers is a registered investment advisory firm registered with the State of California. Past performance is not indicative of future results. The information presented is general and does not take into account your individual circumstances, financial situation, or needs, and is not presented as a personalized recommendation to you. This is for informational purposes only and should not be taken as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in your investment making decisions. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested.