X

Investing On The Safer Side for Higher Yields

|| Staff Blog: Cathy Cagle ||

We’d all like to earn the highest possible yields on our investments – right? Who wouldn’t? Making a profit from your investments is the very heart of what investing is about. Because investments almost always come with some risk, it’s important to understand your comfort level with risk, your ability to withstand potential losses, and the profit you need or hope to achieve before investing. And it’s also important to earn a decent cash yield!

High yield investments, the ones that pay the highest dividends, all too often entail high risks. Junk bonds are a prime example of high yield – high risk investments. Junk bonds have paid high yields but that doesn’t mean they are an appropriate choice for you. You can find safer high yield options with a little research and creativity.

What constitutes a safer investment? A safe investment is one in which you have a lower risk of losing your capital. Ideally you want to preserve your principal, earn yields that beat inflation, and not get zapped with huge fees or restrictions when you need to access your money. Pay attention to time constraints as well – some investments require a minimum holding time. Not being able to access your money when you need it can be devastating! Your ability to access your investment quickly is known as liquidity.

All investments can and should be evaluated in terms of safety, income and growth potential. Safe investing focuses on preservation of principal, diversification, and investment stability as primary goals with secondary goals of capital growth and yield.

Diversification is key to safe investing. Investing in different kinds of investments means you are far less likely to suffer a catastrophic loss in all your assets at the same time. Different investments react differently to the same event, like a catastrophic earthquake or a market crash or a national election. Spreading your risk over several asset classes such as stocks, bonds and precious metals tends to result in higher returns at lower risk. Diversification is considered the most important element for risk management of your investments over time.

Can you be too safe? It all depends on your situation. But yes, sometimes investments that look attractive turn out to have yields well below the rate of inflation. Losing the value of your purchasing power over time means your money buys less and less. Balance the need for safety with the need for a yield that at least beats inflation, which is now running at about 2%.

Figure out your priorities between safety, income and growth and find investment options that match your needs. Check out these options for higher yield, lower risk investments:

  • Peer to Peer Lending: You lend money directly to individuals or small businesses any diversify by spreading your loans out among many borrowers. Loans tend to be for either 3 or 5 years. Your loan is repaid with interest and you can get started for as little as $25.
    • Prosper to invest in consumer loans. Money Answers is an affiliate of Prosper.
    • Lending Club to invest in consumer loans, small business loans and auto refinancing.
  • Real Estate Investing Funds: Invest in almost any size real estate deal through such a fund. They give you access to both big and small projects you may never otherwise be able to afford investing in or don’t want to manage personally.
    • Fundrise to invest in real estate developments. Choose between growth, passive income or a balance of both. Money Answers is an affiliate of Fundrise.
    • Roofstock to invest in single family rental homes with tenants. Market information, lenders, property management and more. Start earning passive income the day you close. Roofstock is an affiliate of Money Answers.
  • High Interest Savings Accounts: Some banks and credit unions are offering accounts paying as high as 5% interest and low or no fees. With FDIC insurance, these accounts are normally risk free.
    • Consumers Credit Union pays up to 5.09% interest on qualifying accounts Anyone can join Consumers Credit Union. Consumers Credit Union is an affiliate of Money Answers.

As a personal finance expert, Jordan recognizes quality solutions, forming affiliate relationships to help improve people’s financial lives.

Looking for an Answer?

Resource Center

Featured on

  • "On behalf of all of us at Organon, I want to thank you for participating in the Experts in Reproductive Medicine Meeting. Your financial planning sessions were so informative. We received wonderful feedback and a great interest in learning more about business finance as well. I know that there were quite a few physicians you were able to spend time with throughout the weekend. Many of them conveyed their appreciation for all of the help and advice you extended them. We are so appreciative and cannot thank you enough for such a great job!"

    Cathy R. Termini

    R.PH Organon Inc.

  • "Where do I begin? You were excellent at the OSC Power Meeting XXIV recently held in St. Pete Beach, Florida. The speaker evaluations proved that you were a huge hit with our members. QSC members are much better off, both personally and professionally, for having attended your program. I might add that we have never had as many requests for the recording of a presentation as we have with yours. Don’t ever hesitate to have any prospective clients contact me as a reference. Thank you again for such a positive experience."

    Charles E. Wallace, III

    Executive Director/Quality Service Contractors

  • "There is always an exception to every rule and your recent seminar to our JWT employees provided that. Generally, I believe you get what you pay for and since we didn’t pay you anything for your recent talk one might not expect the reaction we got. Instead, I have been besieged with compliments about arranging for you to speak. Our employees felt more informed and financially empowered as a result of your discussion with them. I enjoyed meeting you and will be pleased to know the face behind the column that I read in every issue of Money Magazine."

    Jeff White

    Executive VP/General Manager/J. Walter Thompson

  • "On behalf of the Water Systems Council I would like to thank you for speaking at our Spring Meeting in Washington, DC on March 3rd. Your presentation was very well received by our members. The information in your presentation and additional reference materials you provided were both fascinating and timely. We hope you enjoyed meeting our members. Thank you again for taking the time to speak at our meeting."

    Kathleen M. Stanley

    Executive Director/Water Systems Council

  • "The crowd was small, but the quality of your presentation was superb, addressing precisely the areas which I had hoped you would cover. It obviously had a high-interest impact upon the participants. And – it is the kind of expert contribution which makes for a successful meeting. Thank you immensely! And – thank you again for joining us at the Club!"

    Lewis O. Kerwood

    National Society for Real Estate Finance

  • "On behalf of the Take Charge America Institute, the University of Arizona Students in Free Enterprise and their Credit Wise Cats team, I would like to extend my appreciation for your wonderful keynote address last week. Our three-day symposium, “Money Talks, Think you Know? Think Again!” was a great success, largely due to the relevance of your opening statements."

    Marica Klipsch

    Education Coordinator/University of Arizona

  • "Your presentation certainly contributed to the overall success of the event. I sat in on your presentation, “Earning Fast Profits in Hard Times”, and found your presentation to be insightful, educational and thought-provoking and the topic was certainly timely. My opinion of your presentation was confirmed by feedback I received from event attendees. It was a pleasure to have you at our event and it is without reservation that I would recommend your presentation skills to anyone interested in having you speak. I look forward to working with you again."

    Michael P. Scott

    VP/Director of Business Development Pensco Trust Company

  • "... Here are some statistics we received from the attendees: 93.38% agreed that you presented in a clear, organized, engaging manner. 94.84% agreed that the information you presented was valuable to them as business owners. 83.01% agreed that they would travel to attend a 1 or 2 day course presented by you. 83.77% agreed that they would like to see your topics brought to their local study club. 87.25% agreed that they would like to see your topics offered at a future Symposia. Thanks again for all of your awesome contributions!"

    Shaida Ghomi

    Seattle Study Club For Dentists

  • "Thank you so much for coming out last week to Las Vegas and speaking to our participants. I heard so many great things from people that attended your course about how useful the information was."

    Sheryl Dare

    Meeting Planner for Genentech Corporation

  • "... I appreciate your efforts to present meaningful content to make a successful event. Your professionalism, delivery and ability to engage with the attendees were exceptional. I know there were many attendees in the room including me who left with new ideas and insights..."

    Wendy Mathea

    Supplier Diversity Officer/Amgen

Have a question?