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Investing: Selecting A Good Proper Investment Option
When is three percent better than six percent? Yeah, we all know the response, but only until the prices of the securities we currently own begin to fall. Then, logic and mathematical acumen vanish and we become susceptible to all kinds of special cures for the periodic onset of greater interest rates.
We'll be told to sit in money until rates stop soaring, or to sell the securities we own now, just before they lose much more of their precious Market Value. Other specialists will suggest the purchase of shorter-term bonds or even CDs to stem the tide of the perceived erosion in portfolio values.
You'll find two critical issues that your mother never ever told you about Income Investing: (1) Greater rates of interest are great for investors, even better than lower rates, and (2) Choosing the right securities to take advantage of the interest rate cycle isn't particularly difficult.
Greater rates are great for investors, especially when retirement can be a factor within your investment decisions. The more you get for your reinvestment dollars, the more likely it is that you won't need a second job to maintain your lifestyle.
Picking the best securities to reap the benefits of the interest rate cycle isn't particularly challenging, however it does require a change in focus from the statement bottom line as well as the use of a few security types that you may not be 100% comfy with.
I'm going to assume that you simply are familiar with these options, each of which could possibly be considered (from time to time) for a spot within the properly diversified Income Portion of your Asset Allocation:
(1) The traditional individual Municipal and Corporate Bonds, Treasuries, Government Agency Securities, and Preferred Stocks.
(2) The eyebrow raising Unit Trust varietals, Closed End Funds, Royalty Trusts, and REITs.
The market rules that apply to these are fairly predictable, but the capability to produce a safer, greater yielding and flexible portfolio can vary significantly within the security types.
So do a little research and spread your dollars around the many management businesses that are on the market. If your counselor tells you that all of this really is risky, tell them to look into corporate debt restructuring just before you restructure your investment plans.
For the time being, keep doing your own personal research on restructuring finance and investment plans to yield outstanding returns.
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