What to Look For in High Yield Investments

In order to determine what to look for in high yield investments, you must first determine what the term “high yield” means to you. A money market account rate of five to six percent may be a high rate for some people. It is certainly higher than many standard savings accounts. For other investors, a rate of eight or ten percent is expected. When you define your goal, then you can begin to look for investments that match the rate you want.

Investments come in many different sizes and levels of complexity. When picking the best investment for you, stick to one that you understand. While some of the more complex investments are used by professional traders, they are far too complicated for most people investing on a part-time basis. If you don’t have at least a basic understanding of what is being invested and how it works, you should avoid it. Most brokers are upright and honest, but others can use a lot of your nest egg getting their own income increased.

When you are starting out with investment vehicles, go with something that is tangible. For example, value of a company as demonstrated by their dividends. Bonds and treasury notes are something you can depend on. Commodity trading is more risky, so you should understand how it works and decide the level of risk you are willing to accept. Real property is tangible and over the long term has performed very well as an investment.

Generally, you can expect higher risk when you go after high yield returns. Few investment vehicles can provide sustainable rates much higher than 8-10 percent. With promised of higher rates, you may be looking at a scam or Ponzi scheme.

High yield savings accounts are possible to find. They are often found in online banks. The rates can be at least four percent and sometimes even higher. These are FDIC-insured accounts. The security combined with the yield rate makes these accounts a better choice for long term growth of your money.

Another factor to consider when choosing an investment is access to your funds. If you have funds tied up so tightly that you can’t get at them in a case of emergency, you may end up paying significantly more in costs just to be able to use the money that is yours. Money in a savings account or money market account is more available than funds in CDs, but certificates can impose a penalty for early withdrawal.

A good investment program will look for high yield investments that are also safe. Long term capital growth should be a part of your plan, and short term investments can be more risky, since you have time to recover if the investment is lost. The age of the investor, the quality of the company and the stability of the investment vehicle will affect how fast you can increase your net worth.

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