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Reasons to Look at Funding
Income streams are future payments, series of payments or cash flow
instruments that can be sold for immediate cash. Some examples of future income
streams are structured settlements, real estate notes and lottery winnings.
Individuals and businesses sell their income streams for three basic reasons:
- Access
People need or want access to their cash. Sometimes they have a serious need
to pay off credit cards, finance long-term medical care, or to settle a
divorce. Other times, they simple have a desire to purchase a dream home,
take a vacation, buy a new car or boat, finance a wedding, or start a
business, for example. In some cases, people want access to their cash just
for peace of mind. They no longer want to worry about liquidity issues,
collection hassles, or the financial strength of the person who owes the
debt.
- Interest of Yield
People will sell income streams, such as lottery winnings and structured
settlements, even for less than face value because they know that with cash
in hand today, they can start earning interest or yield. Interest or yield
is what gives us the ability to invest money this year and turn it into an
even larger amount of money next year.
- Inflation
Inflation eats away at the future value of "buying power" of
money. You can buy more with a dollar today than you will be able to five,
ten, or twenty years from now. People sell their income streams because they
realize that over time, the payments they receive will drop in real value.
Small payments over a long period of time have less buying power. A Lump Sum
of cash today in place of future income streams like lottery winnings can
provide you with financial stability and flexibility.
Bottom Line: Cash today is worth more than cash tomorrow!
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