What are the 5 best investments for high income? Do ample yields come from high risk, or is there such a thing as a secure, lucrative return? Learn about these 5 high income investments and decide which ones you want to use to balance your portfolio.
- Municipal bonds are great investments for high income. Also known as muni bonds, these vehicles are backed by local and state governments. While there is some risk involved, it is in the best interest of municipalities to pay back their debts—and with the power to raise taxes, unless the local economy completely fails, the returns will come. Muni bonds cost quite a bit initially but the yield with high-quality, general obligation bonds hovers around 3.5 to 5.9 percent. Also, many muni bonds are a source of tax-free income.
- Check out high income funds. A high income mutual fund is one of the 5 best investments because fund managers are actively and aggressively focusing on bringing in money for their clients. There is of course risk involved, but it is buffered by a pool of investors and a pool of investments.
- Put money in energy. Why are energy stocks one of the 5 best investments for high income? Because there is an insatiable demand for energy, and for now at least, there is a supply. Pipeline companies especially should do well with the present quest for more sources of natural gas and oil.
- Step into the commodities market. Commodity prices rise and fall at the drop of a hat, but there is a steady rhythm to this market. For those who understand the flow of goods such as timber, cotton, beef and coffee, money can be made quickly, and a lot of it. There is also a huge potential for loss. Unless you are a commodities expert, seek professional help for this high income investment by researching and choosing a solid, well-managed commodity mutual fund.
- Invest in junk bonds. They are good investments for high income when interest rates are good and when the economy is steady. Junk bonds are corporate bonds with low ratings, but they are not necessarily bad investments. They come with high interest rates to entice investors. Make sure you are comfortable before putting money into this high-risk vehicle.
Investing high-yield is about constant growth, rather than long-term value. It can be an unstable strategy, but when integrated with other safer investments, two or three of the 5 best investments for high income can really enhance a portfolio.