A high yield investment will diversify your portfolio, and if it delivers, you will achieve a higher rate of return – which means you’ll have more cash in your pocket. With our current economic climate in mind, you might be asking if a high yield investment is a good option now? Well, when it comes to maximising your wealth and getting the most from your financial portfolio, a high yield investment seems like a great option. After all, they can make a lot of money in a short time frame and ultimately, give you the most bang for your buck. However, one needs to be cautious as these types of investments come with relative risk, and as the concept of risk can be daunting for some investors, it’s important to research what you are investing in.
High Yield Investments
While high yield investments can deliver the cash, it’s not as simple as filling up your portfolio with these types of investments alone. A portfolio with just high yield stocks is less certain compared to a diversified program. A portfolio of just high yield investments could experience poor growth over time and subsequently, dividends may struggle to increase if the high yield cannot be sustained. Therefore, it’s important to invest in a range of opportunities and keep your portfolio balanced.
VentureCrowd is a professional crowdfunding model aimed at reducing complexity and guiding you through access to handpicked high yield investment opportunities that get the most from your portfolio. Read on to find out if high yield investments are for you.
What is a high yield investment?
For investments, there are two components: yield (income) and growth. Yield is the money you make and growth is the projection or rate of the income increasing over time. As a rule of thumb, investments with a high yield usually have low expected growth, and investments offering a low yield will tend to have high expected growth.
Here are some of the top-rated forms of high yield investments:
- Startup investments – The introduction of crowdfunding in startups is gaining popularity and if your investment is at the seed-level, your financial contribution can also bring innovation to the business which is exciting. The return on your investment will depend on the stage of the startup and of course, how much money you put in.
- Venture Capital – There is the option to invest in one or more publicly-traded venture capital firms. VentureCrowd focuses on making principal investments and managing funds for seed-stage and early-stage ventures. Angel investing also follows similar principles.
- High yield bonds – Also called ‘junk bonds’ which is a fixed income instrument that represents a loan made by an investor to a borrower. These bonds are considered high yield investments as they pay high-interest rates because there is a greater risk of them defaulting.
- Initial Public Offering (IPOs) – This is a type of public offering where shares of a company are sold to investors. An IPO is underwritten by banks that arrange for the shares to be listed on stock exchanges.
- Options Investing – This is basically placing a bet on a stock that it will rise over a certain period of time. Researching the market is paramount if you are interested in making an informed decision.
- Real Estate Investment Trusts (REITs) – These trusts are companies that bundle mortgages together and the income earned is from the interest made. A more secure investment could be through investing in a mortgage fund as this allows investors to lend their money to a range of borrowers.
- Peer to Peer Lending – This is the process of loaning money without the involvement of banks or credit unions. These loans are often unsecured, and therefore come at a higher risk and subsequently offer a higher yield.
Therefore, what is the best low-risk high-yield investment? There are plenty of great options out there, but if you are prudent and specifically considering safe investments with high yields, then there are several options to explore around Index funds, Fixed Annuities, and common stocks that pay dividends.
What is a good average rate of return on High Yield investments?
The market can bring on many variables from year to year, and in this current economic climate changes are inevitable. High yield investments can bring on varied returns as there is volatility in the investment and it really depends on what has happened historically to forecast the future. Generally, the higher the recent returns, the lower the future returns. High yield investments can typically see an average annual return of six percent.
A venture you can count on
As an investor, you are part of the changing global investment landscape, so when investing your money, it’s important to understand who you’re working with. VentureCrowd can offer you choice and complete transparency to help drive your portfolio diversification. In addition to high yield investments, VentureCrowd also assists with other investment approaches in property funds, investment property companies and syndicate investing.