Released on = June 10, 2007, 3:02 am

Press Release Author = Samuel Towers

Industry = Law

Press Release Summary = Structured settlements represent a stream of payments, often
extending twenty years into the future. If you sell this stream, you cannot expect
the buyer to pay you the total of these future payments. In fact, you will get much
less, depending on the amounts and years involved. Let us look at how the buyer
computes the amount to pay you.

Press Release Body = How Much Can You Get by Selling Structured Settlements?

Structured settlements represent a stream of payments, often extending twenty years
into the future. If you sell this stream, you cannot expect the buyer to pay you the
total of these future payments. In fact, you will get much less, depending on the
amounts and years involved. Let us look at how the buyer computes the amount to pay
you.

Money Has A Time Value

If you have 10000 dollars in hand now, you could invest it in different ways. If you
are a small businessperson, you could use it to improve your publicity efforts and
expand your production capacity. These might result in the 10000 dollars doubling in
a year\'s time.

Or, if you are a stock investor, you could trade in stocks and probably make the
10000 dollars grow into at least 12000 dollars by the end of the year.

More modestly, you could invest in an interest-paying security and earn a 5%
interest paid every quarter. That could make the 10000 dollars into 10510 by end of
the year.

Another possibility is to invest the money in a training program that provides you
with a vocational skill in high demand. You could thus enhance your earning
potential and thus earn a return on that investment.

What all the above examples indicate is that money in hand now could earn returns
and accumulate into a larger sum by a future date. This is called time value of
money.

Future Payments Are Discounted

Considering the time value of money, sums received on future dates are discounted to
compute their \"present value\", i.e., value now. This is typically done using
prevailing interest rate in the market. For example, we found that 10000 dollars
invested at 5% interest, paid quarterly, become 10510 dollars at the end of one
year.

Hence, the present value of 10510 dollars received one year from now is only 10000
dollars. Present value is always based on a rate of interest, and the \"interest
compounding\" method used. Interest compounding means the frequency with which
interest is computed and added to the principal. In our example above, the
compounding was done every quarter. Next quarter\'s interest would be computed on
this interest-added principal amount.

The future payments you receive under a structured settlement are discounted in a
similar fashion. Each of the payments would be discounted based on when it is
received. Consequently, the amount you receive now, based the present values of all
the different payments, would be much less than their total.

Use the Cash Well

It is possible that you are cashing out your structured settlement to meet
unavoidable necessities, like paying off a debt or meeting medical expenses. In such
a case, you have no option but to use the cash to meet these.

However, if the cash out is for other purposes, try to invest it in a way that earns
you a good return. For example, you could invest it in a home, in a suburb where
property prices are going up. Or take up a vocational course that would enhance your
employability.

If you already have a decent income from other sources, you might even consider
taking a vacation to recharge yourself.

Try to earn a return that would be higher than the interest you paid for cashing
out. (The discounting of structured payments to present value is actually a kind of
interest payment.)

Select A Buyer Carefully

The buyer of your structured payments should have certain qualifications.

Firstly, the person (or firm) must be experienced in the field. Cashing out
structured settlements involves several legal formalities. Unless the buyer is
experienced enough to handle all the formalities correctly, you might find yourself
in trouble. If a legally binding assignment is not created, the original payer might
refuse to pay your buyer.

Secondly, select a buyer who deals up front with you, explaining what to expect.
Otherwise, you might come to have undue expectations and get into unnecessary
conflict with the buyer.

Finally, select a firm that believes in ethical practices. Unethical firms might
tell you one thing and do something else. They might also not give you a fair deal.

For more read at http://www.structuredsettlements.bz


Web Site = http://www.structuredsettlements.bz

Contact Details = Structured Settlement Investments
4629 State Road
Drexel Hill PA 19026
main 866.973.8853
fax 866.973.8852