Yes, you can collect high-yield income every month. You can also collect high-yield income that bypasses the middleman — Uncle Sam. You pay no income tax on the interest.
Just as important, you can collect high-yield income every month that’s as safe as any individual investment. You just need to know where to look.
Diversification, as most investors know, reduces risk. For this reason, many investors prefer to buy a portfolio of investments.
Most investors get it wrong, though. They buy their portfolios through mutual funds and exchange-traded funds (ETFs).
There’s a better way: the 893(C) account.
893(C) refers to the federal statute that permits a certain type of investment fund. This type of fund trades on the stock exchange, just like an ETF. But unlike an ETF, it enables you to buy the portfolio at a discount to market value.
The advantages of buying at a discount are significant: For one, the discount increases investment yield. The discount further reduces risk. You’re already ahead of the game because you buy your investments at less than market value.
Most investors get it wrong because of ignorance. They’re unaware that 893(C ) accounts exist. Less than 3% of fund-allocated money finds its way to the 893(C)-account sphere.
Tax-Free Income, Paid Monthly
The high-yield, tax-free investment to which I refer, the 893(C) account, pays distributions monthly. The distribution yields 5%, which is larger than you might appreciate.
A 5% distribution is already 2.5X larger than the dividend yield on the S&P 500. When taxes are factored in, the yield can be more than 3X larger.
To earn the equivalent of 5% on tax-free investment requires a taxable investment that yields at least 6.9% (assuming a 28% federal income tax rate). You can spend only what Uncle Sam allows you to keep.
This particular 893(C) account holds a portfolio of municipal bonds originated by local governments across the country. Geographic diversity is another risk reducer.
Risk reduction is elevated to another level by a focus on quality. Nearly 50% of the 100 bonds in this 893(C) account’s portfolio rate at “A” or higher. A bond rated “A” rating or higher is quality stuff.
The multiple layers of risk reduction produce a low-volatility investment. This 893(C) account trades with a 0.07 beta. This investment is only 7% as volatile as the overall stock market.
You get high-yield after-tax income, and you get it in a sleep-enhancing investment.
Buy Tax-Free Bonds for 94 Cents-on-the-Dollar
But the discount is key.
This 5%-yield 893(C) account traded at a premium to market value last year. Today, it trades at a 6.3% discount. If you were to buy at a premium, you’d receive a lower yield.
If you were to buy at market value, you’d also receive a lower yield. A purchase at market value would drop the yield to 4.6%.
So why the discount?
The prospect of rising interest rates weighs on many fixed-income investments. When interest rates rise, fixed-income investments fall.
Since Donald Trump’s presidential victory, investors have anticipated rising interest rates because of his high-growth initiatives. At the same time, the Federal Reserve has raised the federal funds rate — the rate referred to when talk turns to the Fed raising interest rates — three times. Investors have responded by selling fixed-income investments.
Municipal-bond selling has been more severe than most. The good news is that the selling has created an opportunity to invest. Current yields are well above the long-term average.
The opportunity exists because the interest-rate threat is exaggerated. Interest rates show no inclination to move higher. The yield on the 10-year U.S. Treasury note, a bellwether security, has actually trended lower in recent months. It hovers at 2017 lows.
Because market interest rates remain low, the discount is irrational. It’s also exploitable, if you know how to exploit it. This 893(C) account that yields 5% after-tax is a buy today.
But you have to know how to exploit this opportunity. Knowledge is power, and I’m prepared to give you the knowledge required to buy this 893(C) account, and many other high-yield investments, at a discount to market value.
Better yet, I’m prepared to show you how to buy these accounts to pick up income yields 3x, 5X, and even 10X the market average.
It all happens this week during a free live event.
Click here for instant access.