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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

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