Trust Deed Investing vs. Market Investing

When there is money to invest, it can be tempting to gravitate toward investments which promise a quick return or which are advertised everyday such as stocks and bonds as well as the stock market generally. But there are other investment types which can also yield an impressive return on investment such as trust deeds. However, when trying to weigh the two, it can be difficult to determine the differences between them, and ultimately make an educated decision about which type of investment is best for your investment dollars. Trust deed loan brokers can assist you make that educated decision about how trust deed investing can be part of your investment portfolio.

National vs. International

Most investment dollars invested in stocks in the stock market are secured or backed by several different types of property and equipment, which can include factories, mills, warehouses, personal property, and intangible assets (such as copyrights and trademarks) wherever they are located around the world. However, trust deed investing is backed only by a single item, which is real estate located within the country, and many times, within the same area that an investor themselves reside.

Value Fluctuations

A stock’s price can change from minute to minute or hour to hour and often on fickle news such as weather. This can mean high amounts of stress and worry about whether or not your investment will be worth the same at the time you need to use those funds. Trust deeds offer increased stability relative to stocks simply due to their nature: no matter what happens economically, having a place to live will still be the requirement of every person and so this tends to decrease volatile swings in a trust deed’s price or value. Generally speaking, this lower price volatility translates into more value for those residences even in a down market.

Similarly, the value of a stock depends on things that are out of the control of the investor and often unknown to the investor as others are making the decisions and the investor does not know where or what the collateral is securing the investment. However, a trust deed that is well secured (i.e., a property with a good accurate valuation and made at an appropriate loan-to-value ratio), offers more predictability to the investor in terms of value because it is a function of a property’s value as well as the investor’s knowledge. In a trust deed, you also always know where your collateral is as you can frequently drive by it to insure it is in proper order.

Dividend Payments and Control

With stock investments, just one vote by the stock’s board of directors can see any dividends owed to you completely and legally halted for months or years. Not so with trust deed investing. Interest payments under a trust deed will continue to accrue on your investment even if bankruptcy is filed. Should a borrower stop paying due to loss of a job or file bankruptcy, there are options available to recoup your investment such as filing for foreclosure, borrowing against the trust deed, or selling the note.

In addition, stocks generally will pay dividends that fall below the prime interest rate, or not pay any dividends at all. Trust deeds tend to pay well over the prime rate for a variety of reasons including risk-reward and because trust deeds are generally not as liquid investments as stocks.


No stock market investment can guarantee a yield that is compounded annually. A trust deed, however, can provide an investor with enough information at face value to produce a specific yield. Additionally, no stockbroker will guarantee you against losses or agree to purchase your stock should it fail. With a trust deed, however, the buyback of foreclosures for the full investment amount is a common practice.

Trust deed investing can often translate in to significant returns to an investor if done judiciously and intelligently. Indeed, the best chance of success can be had only when proper planning and thorough research has been conducted for each trust deed. The State of California’s Bureau of Real Estate publishes a very informative brochure on trust deed investing which can be obtained at If you are considering investing in trust deeds, it may be beneficial to look at what has worked for others, and to seek professional guidance on whether trust deed investments are right for your specific investment portfolio.

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