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.
When choosing an investment, you should compare and contrast several factors before making your decision. The type of investment should be something that you know about or can learn about without depending on the expertise of someone else. While the vast majority of brokers are honest and hard working, they are still in the business to make money for themselves, as well as for clients. If a broker relies on secret methods or on your lack of knowledge, you run the risk of losing your entire investment fund.
An investment tool should be based on something tangible. Stocks, bonds and commodities are all tangible. You can point to a company or a product that you own or own the rights to. Real estate can be a tangible product in which you can invest.
Risk is a recognized component of most high yield returns. Generally, you will find that the higher the returns, the higher the risk. Beware of promises of 35 to 40 percent returns monthly. There are few investment vehicles that can maintain such a rate. Often, these promises are part of a Ponzi scheme. However, there are investments that pay well and pay consistently. You need to know enough about the underlying product that you can recognize whether the claims are realistic or improbable.
You may want to choose a high interest savings account. Several of the online banks are offering this type of return. The security of accounts that are part of the FDIC system is a plus, even when you are looking at four to five percent annual growth. Accessibility of funds in a savings account is another plus.
Access to your investment funds can be critical if you have a financial emergency. If you diversify your investments so that you can have both safety and high returns, you should also be able to get at at least some of the funds relatively quickly. For example, money in an online savings account is easily available. Money in a money market account usually pays higher interest and is also available. You can get good rates on certificates of deposit.
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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