Creative Ways to Supplement Low Bank Interest Rates

Low interest rates are welcomed by those seeking a mortgage. However, they are the bane of account holders watching the interest earned on deposit accounts decrease almost to insignificance. To combat these paltry returns many are coming up with creative places to park their cash. If done intelligently these alternatives can provide highly attractive returns on your cash without incurring huge risk. Here are some of the more imaginative avenues now being employed.

1. Buy Event Tickets

With the advent of Stubhub and other Internet based ticket reselling sites a world of opportunity has arisen. Many of your probably get special advance ticket offers from your credit card company each month. You throw them in the trash can. Picking out a few events far off in the future is an excellent avenue to seek returns. If the event is cancelled, then you receive a refund in almost all scenarios removing that risk. Otherwise, for events which are sure to sell out, the mark up over face value becomes extreme as the event approaches. Those of you who have paid a scalper can attest to this fact. Assume you had an opportunity to buy 4 tickets for their $45 face for an event six months in the future. Ordinarily, if the particular event doesn't interest you the offer goes in the circular file. In many instances that is tantamount to throwing away money. Instead of ignoring the offer, go ahead and buy the 4 tickets. A conservative price target, should the event sell out, would be $75. Net fees you are looking at 40% return in 6 months. Assume also that you occasionally mess up and buy tickets which you resell at a loss. Accounting for this, a conservative aggregate return would be 20% every six months, or 40% a year. Predicting which very popular events will eventually sell out is not rocket science. It used to be you had to meet a stranger in some parking lot to do a transaction. Now it can all be done online with a third party web site acting as escrow agent. It is almost as easy as trading a stock. 40% annual return is attractive to even a hotshot hedge fund manager.

2. Refinance A Mortgage

The Internet also allows you now to become a bank. If you have a friend or relative facing a high interest rate adjustable mortgage, then you could be the solution. Assuming the reset is the main culprit and the borrower can meet the fixed rate payment, then you can earn the interest rate that your bank receives as opposed to pays. Several reputable web sites now exist which act as middleman for the transaction. All filings are done allowing the borrower to have the same tax advantages as they had with a traditional mortgage. Instead of paying the bank the interest, they are now paying it to you. You are converting long term retirement deposits to an attractive rate secured against real estate. Sometimes, it is doubly gratifying helping a friend in need while increasing your cash returns. There are obvious risks, but if done right in the appropriate circumstances this can prove to be both creative and beneficial to both sides of the transaction.

3. Go Geothermal

This avenue allows you to be both green and financially savvy. Many are discovering that a geothermal residential unit can provide for five to seven year pay back. This can be reduced assuming energy prices rise faster than expected. After the pay back period ends, you will experience significant return when viewed against original cash investment. Comparing the return of a 10 year $25,000 deposit instrument against investing it in a geothermal unit for your house the results are compelling. Not only do you exponentially increase the effective interest rate paid on your money, but you also help out the planet.

These three are only a few of many creative ways to increase the return you receive on your cash. Of course, all avenues for increased return entail increased risk. However, if done with research and thought these routes can prove to be very savvy ideas.