High yield investments are a great way of earning some extra cash especially as a retiree. However, each domain comes with its own risks, which is why many people end up losing money.
High yield investments are not free money. You need to have knowledge and be realistic about the risks they involve.
To put it in simple terms, the best way to look at each investment is like Sherlock Holmes. Even what seems like the most certain option has its chances of failure and you should acknowledge them. It’s not about being sceptical, it’s about measuring your expectations depending on the offer!
Before investing in anything, start questioning everything.
Higher yields bring you more benefits than safe alternatives like treasury securities. Also, note that your income will fluctuate each month depending on the kind of investment you make.
With that in mind, let’s check out some yields that are both a bit risky and (a bit more) rewarding on the long run.
High Yield Bonds
Most of the times, these bonds come from companies that aren’t that stable from a financial point of view. Also known as ‘junk bonds,’ they pay a higher yield than safer alternatives to attract investors.
Real Estate Investment Trusts (REITs)
Simply put, REIT is a mutual fund that owns real estate.
REIT gets a certain rental income from different real estate and it passes along to you, the investor. This type of investment trusts can be traded either publicly or in private. Also, they can own either a broad or a narrow portfolio of real estate.
What’s great about REITs is that they allow you to invest in pretty much any real estate area. Whether it’s apartments, retail space, healthcare, mortgages or storage spaces, you can get involved in anything that seems promising.
Technically, a preferred stock is an equity investment. However, they are mostly compared to bonds because of their high interest rate sensitivity.
Preferred stocks pay dividends at a fixed rate and a company is required to pay dividends to their preferred stock holders. However, this must happen before a single penny gets paid out to common stock holders.