One can invest in high yield bonds. They are issued by companies who do not enjoy solid financial strength. Hence they promise to pay high returns to attract investors. Most investors find this option highly attractive and a diversified option.
Investing in stocks is another high yield option. Technically speaking, a preferred stock is an equity investment which is sensitive to interest rate. In preferred stocks, dividends are paid at a fixed rate. It is due to this feature that a lot of investors are attracted to it. Another option is investing in dividend paying stocks. People on the verge of retirement opt to invest in them as they provide a steady source of income. The income is there, but only till the company is making money. If the company gets in any kind of financial trouble, it can reduce or eliminate the dividend altogether. If you want to invest in this, do your research and choose a company that has been making solid profits. If you don't want to get into this, then go for dividend income fund.
Another formed of high yield investment is through closed end funds. It is a form of a mutual fund. The mechanism is the same as it also contains a pool of investor money. The only difference is that it closes once the fund has issued a certain number of shares. No new investors can be a part of it then. If you still want to invest in it, you will have to buy shares just like you buy a stock. Before investing in a closed end fund keep in mind that not all closed end funds are structured to pay income, and some can distribute principal as part of their monthly or quarterly distributions. Do the research carefully if your heart is set upon buying them, do so when they are selling at a discount.
High yield investments are indeed very attractive but one must not lose perspective before spilling your hard-earned cash. In order to get maximum returns, thorough research is the key. Companies give interesting attractive options just to lure you in. High yield investments will always tell the positive aspects. If you want to judge a company as to whether it is sound or not, study its trading behavior during hard times. If it has faltered, it is not the best of options. If you finally find the right company for yourself, go make some extra cash!
For more information, please visit: High Yield Money Market