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High Yield Investing – Gift or Curse?

pros and cons of paying off the mortgage earlyTough competition and bad publicity has created a negative image about high yield investing in the industry. It is true that the credit risks are quite high when you put your money into these investments. However, the important question is, is it worth it? It can be. Take a look at the following information to get a better idea about this investment plan.

Investment Portfolios

This plan is spotted in many investment portfolios over the recent years. There are two main reasons for this inclusion. First of all, they offer investors risk-adjusted returns that enables them to invest any amount of money. The feeling of investing money without having to worry about things such as security or profitability is definitely a gift. This plan has the ability to keep you informed about the future status of your investment. Moreover, it also enables you to diversify your investment portfolio. This diversification of investments eliminates any potential financial risk.

Global Trends

Although the market originated in the 1960s, it has grown to be popular only over the recent years.  As the original developer, the United States has 80% of control over the internal high yield market. This is not only because it was the first to develop the idea, but also due to the number of smart investors in the country. Although Europe and Asia have small capacities, they have shown a higher growth rate than the USA in the past few years. This indicates that the number of high yield investments in these continents are rapidly growing – especially in Europe.

Not a Curse

You might wonder, ‘then why are people calling it junk?’ The phrase ‘junk bonds’ was coined due to the low rankings such as triple C ratings given by investing sites due to the credit risks. However, the ratings have increased over recent times up to double B standards. This indicates that there has been a significant development in the field. This negative media has to be eliminated in order to create a stronger support for this investment plan.

Best Gift Ever

This investment plan has a number of benefits for investors. First of all, investors are exposed to low interest rates and inflation risks. This is due to the fact that the trading takes place at shorter maturities. That is, their contracts are based on short periods of time in order to reduce the risk of financial threats. It has also been found that this plan has a higher return-on-investment. Moreover, it also enables portfolio diversification since they are much different to equities and government debts.

Many have changed their opinion of high yield investing after they have been exposed to the reality of it. When you diversify properly (in other words, don’t invest solely in high-yield investments), you’ll likely not ruin your business or put yourself at risk. Investing high-yield can be a profitable investment plan that offers value for your money by reducing your debt levels to a great extent.

Have you ever invested in the high-yield arenas?

Money

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

2 Comments

  1. Depending on what you consider high yield, we have a couple of investments that are paying near to or above 5% which I consider pretty good now. A couple of pretty rock solid stocks with good dividends are Altria and AT&T.

    • That is quite solid today! Nice job Kathy! Thanks for sharing!


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