Guaranteed Contract Income: A Once-in-a Decade Opportunity

“Dad! You’re such a control freak!!”

No one ever said raising teenage daughters would be easy…

The outburst came after I said no to my 13-year-old daughter’s request to go to a questionable concert. Thankfully, being called a “control freak” didn’t really get under my skin. After all, it’s my job to be in control and make wise decisions for my kids.

Being called a “control freak” may not be your idea of a compliment. But when it comes to managing your investments, it sure pays to be a control freak.

Today, I want to tell you about a special class of investments that lets you take control.

This investment doesn’t subject you to the roller coaster stock market, so you don’t have to worry that a market crash will wipe out your retirement savings. Or whether the Federal Reserve will raise interest rates. Or if some CEO decides to cut your dividend.

And you can take control of your money by investing in what I call contract income opportunities...

Income investing is my specialty. Most people think income investing is boring that it’s safe and reliable but doesn’t offer serious returns.

But that’s not always the case…

This new income opportunity is one of the most lucrative trades I’ve seen in at least a decade. Contract income opportunities have the potential to double or triple investors’ money within five years… with absolutely none of the risk they face with stocks.

And here’s the best part about this investment: If you do a little bit of homework, it’s almost impossible to lose money. That’s how safe it is.

It’s true that no investment can be totally risk-free. But this investment has a 96% payout rate. That makes it as close to a “sure thing” as you can possibly get. And this investment is actually guaranteed by law, which I explain below.

Before I show you how this works, you should know the timing on this opportunity is extremely tight. The most profitable trades only come on the market about once or twice a decade. And the last time they opened up like this was back in 2009. Then, just a few years later, the opportunity was gone.

But now these hugely profitable trades are back. And this is the time to capitalize on them, before the window shuts again.

Today, I show you exactly how these contract income opportunities work, and why they could double or triple your money over the next five years — without owning a single stock.

Most investors buy stocks and hope they move higher. Maybe these stocks pay reliable dividends (and I’m actually a big fan of dividend stocks).

But one thing you need to know about dividends is that management teams can cut the dividend payments. And over the last few years, we’ve seen a number of “reliable” companies do just that.

I don’t know about you, but when I read that the CEO of one of my stocks decided to cut the company’s dividend, I feel like I’m losing control of my investments. I’m basically at the mercy of this CEO to pay me the dividends I deserve for investing in his company.

But there’s a way to invest without relying on a company CEO to maintain a dividend. And a way to invest without worrying about stock prices trading higher or lower.

And this special approach to investing relies on legally guaranteed contracts to pay you.

This special approach is through the bond market. And if you’re about to tune out because you think the bond market is boring — or doesn’t give you enough income — or can’t help you collect huge profits from the market, I’m afraid you’re mistaken.

Corporate bonds can actually be some of the most powerful investment tools you’ve ever seen. And the corporate bonds I’ll be recommending in my new service, Contract Income Alert, will give my readers the opportunity to double their money every five years — and that opportunity is legally guaranteed by the companies I recommend.

As long as the company remains solvent, it affords investors the chance to double their money, or more.

Here’s how it works…

When companies need to borrow money, they issue bonds. So when you invest in a bond, the company literally owes you money. That debt is a legal requirement and it doesn’t matter whether the company is profitable or not. It doesn’t matter whether a CEO wants to pay the debt or not.

The company is required — by law — to pay investors back.

Now, you might think, “Big deal… I can loan a company money by investing in a bond, and then the company pays me back. So what?”

Well, at Contract Income Alert, I’ll only be recommending bonds that are trading at a discount. In other words, my readers will pay a certain price to buy the bonds, and the company will owe them more money than they paid for the bond.

Let’s look at an example…

Consider the retailer Toys R Us. Years ago, Toys R Us sold bonds to the public to raise enough money to expand. The cash could have been used to buy buildings, to grow its inventory, or for marketing.

Today, competition from Amazon.com has made it more difficult for Toys R Us to generate profits. The company has had to close some stores and the company’s bonds have traded lower.

Because of the challenges, you might be able to buy Toys R Us bonds at 50 cents on the dollar.

In other words, you could pay $500 to buy a bond. And when you own that bond, Toys R Us is legally required to pay you $1,000 when the bond matures. So in this example, Toys R Us, as long as the company remains solvent, is literally legally obligated to double your money!

But it gets even better than that…

Because the corporate bonds I’ll be recommending are also legally required to pay investors interest. And often those interest payments can be incredibly lucrative.

Consider a bond that pays investors 10%. A typical bond like this would send you two payments a year for $50 each. So a bond that represents $1,000 in debt would pay you $100 over the course of a year.

But what happens if you buy that bond for a 50% discount? Would the payments change?

The answer is no. Nothing changes about the payments you receive. The company is still obligated to send out two payments of $50 each year.

Now think about the income that you’ll receive when you buy the bond at a 50% discount. You could pay $500 for this bond, and receive $100 each year from the company. That’s a legally obligated 20% in interest — plus, the company is still required to double your money when the bonds mature. That’s a tremendous investment.

I’m sure you can now see why buying bonds can be an extremely powerful way to grow your wealth and boost your income.

One of the most important questions investors have about bonds is: What happens if a company can’t repay its debt? The answer shows you just how safe these investments can be.

Suppose a company manages its debt poorly and doesn’t have enough cash to make an interest payment or pay back its debt on time. That company would ultimately be forced into bankruptcy — which sounds like a scary thing.

Indeed, if you owned shares of that company’s stock, a bankruptcy would probably mean that you get nothing. Your entire investment could easily be wiped out.

But if you own the bonds of this company, even a bankruptcy doesn’t necessarily mean that you lose money. In this event, all of the company’s assets are typically sold, and the proceeds are given to the company’s creditors.

That’s you!

So even in the case of bankruptcy, a company’s bondholders go to the front of the line to collect whatever assets the company has. In this scenario, it’s unlikely you’d receive the full $1,000 per bond that you are owed, but you’d likely still receive a meaningful amount of cash back. And since I always recommend buying bonds at a discount to the $1,000 debt amount, it’s likely that even if one of these companies goes bankrupt, my readers would still make money on the trade.

Now, I don’t expect the companies my service invests in to go bankrupt. I have a rigorous research process that I use to identify companies that have the means to repay their debt. But it’s helpful to know that even in the worst-case scenario for these contract income opportunities, my readers still walk away with money in their pocket.

My goal for each of our contract income opportunities is to help my readers double their money in five years or less. And in many cases, these investments will double in a much shorter time period.

To successfully double my readers’ money with these bond opportunities, the key is to buy bonds at an attractive price.

This usually means that something is challenging the companies responsible for repaying the bonds. If everything was going well, the bonds would trade close to $1,000 per bond and readers wouldn’t have a chance to double their money.

So the key is to look for bonds from companies that are facing temporary challenges, and then look very carefully at whether the company will ultimately be able to pay the bond back in full. So I’ve developed asystem to determine how likely these companies are to repay their debt and double my readers’ money.

Here’s to growing your income!

Zach Scheidt
for The Daily Reckoning

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