High-yield, low-risk investment? No way
| If you truly want bigger reward, gotta take a gamble
Q. My husband and I just inherited $20,000. We’d like to place it in some type of highyield account to save up toward a possible wedding for our daughter. With what has happened in the stock market, we do not want to risk losing any of it. What do you recommend?
A. You have posed impossible requirements. You want high yield with low or no risk. Those things are nearly impossible to find together.
The higher the risk, the higher the reward and, conversely, the lower the risk, the lower the reward. On the amount that you have indicated, with low risk, you probably will be as well to invest in government bonds. You must understand that they are paying a very low interest rate and very likely will continue to.
Q. What is PMI in a mortgage? My sister was telling me that she will never be rid of the PMI off of her mortgage.
A. It’s funny how many times I get asked this question. PMI stands for Private Mortgage Insurance. This is simply an insurance company that guarantees the first 20 percent of your loan or whatever fraction is not covered by your down payment.
At such a time that your interest in the home exceeds 20 percent, you can apply to the lender to have the PMI eliminated. This will require you to pay for an appraisal and some other minor expenses, but it is certainly well worthwhile. If at all possible, you are much better off avoiding the PMI to begin with.
Q. About 25 years ago, I bought a piece of property and found out that it has a cloud over the title. The previous owners did not get title insurance and it seems as if the man they bought it from was granted ownership to it illegally.
A title insurance company insured it for the purchase price, but I was advised to upgrade it as I improved the property. Did we do the right thing?
A. As long as you are able to cover it with title insurance, it would seem to me that your interests are protected. However, they may charge you a premium because there is this problem. If you are uncomfortable, hire an attorney to clear the title.
Given the fact that you have no reason to sell the property now, this would be the appropriate time to get the title straightened out.
E-mail questions to email@example.com. Questions of general interest will be answered in future columns.
United Feature Syndicate