High-yield, low-risk in­vest­ment? No way

| If you truly want big­ger re­ward, gotta take a gam­ble

Chicago Sun-Times - - Easy - BY BRUCE WIL­LIAMS

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 bruce@brucewil­liams.com. Ques­tions of gen­eral in­ter­est will be an­swered in fu­ture col­umns.

United Fea­ture Syn­di­cate

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