For the past few months, I've been telling readers of my High-Yield Investing newsletter about the secrets of America's privileged. You see, wealthy folks in the U.S. invest differently than most of us. And I believe it's worth examining their investing habits and taking a cue from their practices.
After all, America's privileged have their wealth for a reason... It's one thing to accumulate wealth, but they're also incredibly successful at preserving and growing it for years on end.
Ever since I can remember, money was never a source of worry in our family. I don't recall hard times while growing up. I know there were recessions... and I had friends whose fathers had been laid off. But somehow, we were isolated from the same hardships.
You see, my grandfather came upon the perpetual income of America's privileged 30 years ago and it has changed the way our family has lived ever since...
Now, don't get me wrong. I'm not claiming I come from a family of America's privileged. We're ordinary folks. The kind you meet every day.
Both my father and my grandfather were hard-working men. They both believed in an honest day's work for an honest day's pay.
They don't live high on the hog. No luxury vacations to Europe... or garages packed with showy cars. It's not because they can't afford them. It's just that these things don't matter much.
What matters is never having to worry about feeding your family... about paying your bills.
...About knowing you can retire whenever you please... About knowing you can take a day off to help your neighbor...
...And knowing that your grandchildren can afford college without getting into debt... or that they'll be able to buy a house once old enough.
That's why my research team and I embarked on an extensive project to research just how America's wealthy elite are able to protect and grow their assets over time. And according to our research, one asset class America's privileged has used for decades consistently beats the income regular investors collect from stocks, bonds and mutual funds over a 60 year period.
Specifically, I'm talking about trusts.
When you think about it, this makes sense. After all, most investors know that trusts allow individuals to grow their assets safely while keeping it out of reach of Uncle Sam and everyone else. Only the persons designated as the "beneficiaries" of the trust have access to the income it produces.
But the mistake most regular investors make is that they usually assume trusts are only for wealthy investors -- and that they're off-limits to the rest of us.
But thanks to a law signed 53 years ago by President Eisenhower, it's possible for ordinary investors to tap into the same income source wealthy Americans have used to preserve and grow their wealth for centuries.
In fact, many working-class American families have already learned to do this.
But let me be clear: these "Eisenhower Trusts" aren't the same thing as the family trusts used by America's Privileged. Their family trusts aren't accessible to you and me -- only to their family members. On the other hand, Eisenhower Trusts pay out to anyone who registers with them.
The most common Eisenhower Trusts are dividend-paying securities that invest in real estate. Most own land or buildings and make their money by renting these spaces to individuals or businesses. Some also earn interest on real estate securities, such as mortgage bonds. Others earn their keep by simply funding various real estate ventures.
Most investors who know about Eisenhower Trusts buy them for their rich dividends. In fact, according to our research, the average trusts holding a diversified property portfolio offers an annual dividend yield of about 5%, more than double the average 2% yield paid out by the S&P 500. That's money in your pocket.
Even better, the cash usually keeps coming in regardless of whether a particular Eisenhower Trust's share price goes up or down. That's because to preserve their unique tax advantage, they're required by law to pay out 90% of their income as dividends to shareholders. In return, these special securities are not subject to corporate income tax.