Skip to main content

Sound Advice: November 15, 2023

Where To Get High Yields Today

Investing for high yields often involves taking on higher levels of risk. Here are several options that historically have offered the potential for high yields, though it's important to note that all investments come with risks, and it's crucial to do thorough research and, if necessary, consult with a financial adviser before making any investment decisions.

  1. Money Market Funds: This is the simplest and most straightforward option currently available and daily liquidity.  Current rates approximate 5%, which from most standpoints compares favorably with other generous yielding options.
  2. Dividend Stocks: Look for established companies with a history of paying dividends. These can offer regular streams of income, but remember that stock prices can be volatile and dividends can be reduced or eliminated.
  3. Real Estate Investment Trusts (REITs): REITs are companies that own, operate or finance real estate that produces income. They often pay high dividends because they are required by law to distribute a significant portion of their earnings to shareholders.
  4. High-Yield Bonds: These are corporate bonds with lower credit ratings, indicating a higher risk of default. That’s why the yields are higher.
  5. Peer-to-Peer Lending: Online platforms allow you to lend money directly to individuals or small businesses in exchange for interest payments. This can offer relatively high yields, but it's also risky, especially if the borrower defaults.
  6. Preferred Stocks: Preferred stock is a class of stock that often pays higher dividends than common stock. Preferred shares have a fixed dividend rate and are senior to common shares in the event of liquidation.  They do not have the appreciation potential of common stock.
  7. Master Limited Partnerships (MLPs): MLPs are companies that are publicly traded and combine the tax benefits of a partnership with the liquidity of a publicly traded company. They often operate in the energy and natural resources sectors and can offer high yields.
  8. High-Yield Savings Accounts and CDs: Although not as high-yielding as some other options, these are very low-risk options for saving money. Online banks often offer higher interest rates than traditional brick-and-mortar banks. CDs, however, have specified holding periods rather than ongoing liquidity.
  9. Dividend-focused Mutual Funds or ETFs: Mutual funds or exchange-traded funds (ETFs) that focus on dividend-paying stocks can offer diversification and professional management.
  10. Options Trading: Options trading can be used to generate income, but it's complex and risky. This strategy is suitable only for experienced investors.

Remember, the potential for high yields from these various possibilities can be attractive, it's essential to understand the risks involved. Diversification, careful research, and a long-term perspective are key principles of successful investing. Also, consider your risk tolerance and investment goals before making any decisions.

N. Russell Wayne, CFP

Sound Asset Management Inc.

Weston, CT  06883

203-895-8877

Questions?  Please contact me at nrwayne@soundasset.com

Comments

Post a Comment

Popular posts from this blog

Sound Advice: July 16, 2025

Fixed annuities are poor investments Fixed annuities are often criticized as poor investments for several reasons, despite their reputation for providing stable, predictable income.  Here are the key drawbacks and concerns:   High Fees and Commissions Internal Fees:  Fixed annuities can carry a range of fees, including administrative charges, mortality expense risk fees, and rider fees. These can add up to 2%–4% per year, significantly eroding returns over time. Commissions:  Sales agents and financial advisors often receive high commissions for selling annuities—sometimes as much as 5%–8% of the invested amount. This creates a financial incentive for advisers to recommend them, even when they may not be the best fit for the client. Comparison to Other Investments:  Mutual funds and ETFs typically have much lower fees and commissions, making them more cost-effective for long-term growth. Limited Growth a...
Post a Comment
Read more

Sound Advice: October 8, 2025

How many investors have outperformed the stock market over the last 20 years? Very few investors have outperformed the stock market over the past 20 years.   Data shows that only about 6% to 8% of actively managed equity funds in the U.S. beat the market over this period, with the vast majority—over 90%—underperforming the S&P 500 or equivalent broad indexes. Percentage of Investors Beating the Market Only 8% of equity funds investing in large companies managed to outperform the market over a recent 20-year span. About 94% of all domestic funds underperformed the S&P 1500 Composite Index from 2005-2024. Over shorter timeframes (5-10 years), typically fewer than 15-20% of fund managers beat the S&P 500, and performance persistence is rare. Why It Is Rare The S&P 500’s high returns have proven immensely difficult to beat, especially as indexing has become popular and markets have ...
Post a Comment
Read more

Sound Advice: January 15, 2025

Why investors shouldn't pay attention to Wall Street forecasts   Investors shouldn't pay attention to Wall Street forecasts for several compelling reasons: Poor accuracy Wall Street forecasts have a terrible track record of accuracy. Studies show that their predictions are often no better than random chance, with accuracy rates as low as 47%   Some prominent analysts even perform worse, with accuracy ratings as low as 35% Consistent overestimation Analysts consistently overestimate earnings growth, predicting 10-12%                 annual growth when the reality is closer to 6%.   This overoptimism can                 lead investors to make overly aggressive bets in the market. Inability to predict unpredictable events The stock market is influenced by numerous unpredictable factors, including geopolitical events, technological changes, and company-specific news.   Anal...
Post a Comment
Read more