Legitimate High Yield Investing - Safety First, Then Returns
Legitimate High Yield Investing is a major concern these days following a multitude of investment scams ranging from the most infamous Bernie Madoff saga to smaller, yet equally painful scams involving purported CDs yielding close to double digit rates (Stanford being the most prominent) to money managers taking off with investor funds. While some of the best and the brightest fell for these scams, some simple safeguards and investor mandates could have prevented individual investors from losing their money.
At its most basic level, total return, in this case in the form of yield, is generally tied to the risk involved in the asset. For instance, safe and liquid bank deposit accounts and short term Treasuries are yielding close to nothing while there are still
high yield corporate bonds
delivering double digit returns. And then of course, there's common equity (stocks) which delivered 70% in the year following the market lows in March 2009. But then, within those various hierarchies there are varying levels of risk/return quality and other factors like time horizon and diversification that an investor must consider.
Given these factors, investors are best served in first considering the risks and benefits to various types of income investments, and then within those classes, seek to optimize their investment returns. Borrowing from the Hippocratic oath "First, do no harm", the key for someone who is willing to sacrifice the prospect of higher return for assurance of safety, is to focus solely on legitimate high yield returns and ignore the higher risk options available.
Consider the following income-generating instruments which vary in relative safety and income but are widely regarded as legitimate high yield investing options for investors.
Learn more about the various types of
High Yield Safe Investments
Return from Legitimate High Yield Investing to More High Yield Passive Income