Avoid High YTB Investments
By Paul Price
YTB = Yield to Broker.
People with serious money are continuously subjected to investment offers. Many of them make sense only for the person earning the commission for brokering the deal. The proffered investments can range from total scams like the Bernie Madoff fiasco, to annuities, limited partnerships or other assorted financial offerings.
Many are legitimate. Most of them offer subpar potential rewards served up with with doses of higher than normal risk. Over the course of your lifetime, avoiding bad deals can be just as important to your net worth as getting into good ones.
Any investment that needs a small book to explain itself should probably be automatically disqualified from consideration. Some years ago an insurance salesperson presented me with a formal fixed-annuity proposal that ran more than 1500 pages! Even the agent couldn’t explain many of the details. I didn’t buy.
A friend asked me to evaluate the American Realty Capital Global Trust. It was being touted to him but their offering document was too daunting for him to decipher.
Even if you believe in the proposed international sale-leaseback concept, the fully disclosed Risk Factors should give you pause. The 'Risk Factors' segment ran for three full pages of fine print. You can read them all at www.arcglobaltrust.com. All the graphics in this article relating to ARCG come directly from the company’s own documents.
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