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High Rate Investments
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High Rate Investments

Most high rate investments often involve risky assets, but these days it seems even the most safe assets (US Dollars and US Treasuries) are coming under greater scrutiny. Investors today are hard pressed to find high rate investments with any kind of fixed yield. The result is that money is moving in greater and greater quantities into alternative assets - either foreign or exotic trades.

Higher Yields in Fixed Income Securities Difficult

One needs to look back several years now in order to find interest rates at a reasonable level for fixed income investors. It has been years since any sort of money market or savings account or long term CD paid any sort of decent yield. Money market rates (if you're lucky) hover around 1% plus or minus, likewise for online savings accounts. Retirees who had planned on living off their nest egg based upon 4-5% yields have been subjected to a rude awakening. The bank collapse and financial crisis of 2008 has done much to destroy the retirement plans of many seniors, and there has been a great deal of competition for fewer and fewer decent paying safe fixed income assets.

Foreign Markets Offering High Rates of Return But Volatility Killing Profits

Investors with a little more savvy have opted to put money in foreign markets, either via mutual funds or ETFs or with forex trading accounts. Doing so offers the benefit of earning foreign rates (which tend to be higher) at the expense of currency rate exposure. Investment in Australian and Canadian dollars did well earlier this year (hitting historic highs) however a sudden rise in the dollar (and fall in commodities markets) pinched off profits for some leveraged investors. Still - forex carry trading offers some benefit to people looking to get better yield.

Alternative Assets as Means of Finding High Rate Investments

High rate investments are more likely to be found these days in riskier asset classes. Options trading still offers opportunities for traders willing to take on the higher risk associated with these investments. Other investors seeking a higher yield without the increase maintenance have tried leveraged ETFs and commodities ETFs as a way to increase profits. Unfortunately (like the forex investors) these assets have run into the same manipulation and volatility issues as the forex trading investors.

High rate of return investments that have traditionally fared better involve converting cash investment outflows into greater (or nearer term) cash inflows. One area where investors seeking high rate investments might find some success would be to focus on creating smaller returns of shorter duration. This will have the same impact (if repeated) of making big gains on longer term positions.


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Gary2  

Wow nice one here Steve you did your home here. Gary

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  about 9 years ago
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