High Yield Investing With Safety: Is It Possible?

Money markets investing, while relatively safe, simply does not offer a high return. They are excellent for money you will need in a short period of time, ninety days or less. When trying to improve your return, your concern for the safety of principal determines the amount of risk you will want to take. Get rich quick, or the offer of extraordinary returns, should signal to you, the risk is high. High yield investing is all relative. High yield with safety may not be considered high yield by some, and may not be labeled as high return.

To get the best return for your money in the safest way, you should think insured. Of course, there are longer term CDs that have insured principals, giving you a higher return for a longer commitment, but there are also insured bonds. Insured bonds are generally municipal bonds of a high grade, but even with this investment, you may have to hold them until maturity, which may be 20 years. Check the terms of the bond and any call features. Municipal bonds as with federal notes, bonds and treasury bills also may give you a tax advantage. Determined by your tax rate, the yields on these investments may be higher than yields you can obtain with any other investment.

High yield investment opportunities may lie in high yield bonds. You will want to research these thoroughly to determine the actual risk involved in each. Determine the grade of the bond, if they are pre-funded or insured, and if the coupon (rate of interest) is worth any additional risk you may be taking.

Diversification has always been a safeguard against risk. If your portfolio is not large, or you want ease of investment and ready access to your money, you may consider a high yield income mutual fund as one of the best high yield investments for you. Funds are managed by professional fund managers and you only have to research the funds philosophy, the fund manager’s past performance and the reputation of the fund family. There is, of course, a fee for investing and management, however, returns are often worth the cost. When evaluating costs, remember you will also pay commissions on individual bond purchases as well, and depending on the number of bonds, the number of rollovers you will have and your broker, commissions may exceed the sales charge and fees on a mutual fund.