As interest rates on commercial bank savings, municipal and treasury bonds continue to nosedive, the cost of living shoots high up. But this doesn’t mean you necessarily have to start tapping into your life savings to complement your current incomes in sorting bills.
To the contrary, you should be thinking of investing into high-yield ventures, creating extra passive supplemental income streams from interest accrued to complement your monthly earnings or just grow your savings.
But like most people, the first thing that probably comes to mind when anybody mentions high-return investments is, what is the underlying risks?
Well, the truth is that every investment brings with it a fair share of risks. Even the fixed deposit savings and treasury bonds carry with them a share of risks, albeit negligible. And when it comes to investment, the old adage on ‘the higher the risk the higher the possible returns’ remains true.
Today, however, you can take comfort in the knowledge of the fact that technology and innovative developments in the financial an investment industry have made it possible to minimize your risk exposure. The traditionally considered high-risk ventures are turning into high yield safe havens given the massive diversification, hedging, and securitization of debts employed by different investment firms. But, what can you consider to be the most feasible high yield investment options for 2020 and why should you invest here despite the risk warnings?
Why consider high-risk/high-interest investments?
- Above average returns: The returns associated with most of these investments outweigh any possible risks by far. They also promise higher than average returns with most averaging well above 10% of the initial investment and some pushing towards doubling this investment.
- Diversification and securitization minimizes risks: The only reason most conservative investors have stuck with the banks and their laughable interest rates on savings is due to the fear of high risks posed by high yield investments. However, such advancements in the industry like an extensive diversification of investment portfolios and taking collateral for investments have reduced the risk without compromising the rate of returns.
- Readily available: Businesses, governments, and individuals are always looking for extra funding outside the conventional banking systems. And there is always individuals and small businesses that are willing to pay healthy interests on the cash advance if you don’t pay too much attention to their credit rating scores or other loans. The market for high-yield investments is therefore considerably insatiable as every day brings up yet another opportunity.
- Short term investments: Most high yield investments have three peculiar features. They pay above-average returns, they are always in demand and they also are relatively short term. Rarely will you find a high yield venture that requires you to commit your funds for the next seven or ten years. Most are within one, two or three ranges at most and the longer they drag on, the higher the reward.
- Relatively liquid: The fact that most of these investments are always in demand means that they are highly liquid. Ideally, if your preferred investment doesn’t support premature termination, there will always be a secondary market where you can dispose it off quickly in the case of emergencies.
What are the pros and cons of investing in high-yield return ventures?
Criteria used to identify the most ideal high yield ventures to invest in 2020:
- The potential return on investments
- Room for diversification
- Risk management tools
- Ease of liquidation and availability of secondary markets
- The time limit for the investment
- Regulation and reputation of the investment vehicle
Best high-return investments to consider this year:
How do you decide on the most feasible investment opportunity for you?
- Evaluate your risk tolerance: Each of these high-yield investments brings along its fair share of risks ranging from defaults on loans, miscalculation of market forecasts, and sudden negative economic news. Others have the backing of assets as collateral for invested amounts. When deciding on an investment we advise that you settle for the one with what you consider the most tolerable risk levels.
- Examine your familiarity with the investments: If you are a career stock real estate trader, you are better off sticking to high yield investments relating the field. This gives you a better chance of vetting the investment opportunity, spotting its strengths and weaknesses as well as identifying the best market entry and exit points that guarantees maximal returns.
- Determine the time limit to achieving your financial goals: How long does it take the investment to mature and how long are you willing to wait. Understand that while some opportunities only take hours or days to realize meaningful profits, others take months and even years. This then begs the question of how long you are willing to wait.
- Decide on the investment management: Are you looking forward to actively managing your preferred high yield investment option or will you leave it to the experts? If you are not proficient enough in a particular high-yield investment option or just don’t have enough time to actively manage the fund, we advise that you consider committing your funds to an expertly managed investment.
- Factor in the impact of fees and charges on your net returns: When deciding on an investment, especially the expert-managed platforms, you must also take into account the management fees and charges. Note that enormous fund management fees and charges often end up eating into your net returns.
In the finance and investment sector, big wins call for even bigger risks. If you hope to have your money earn you decent returns that boost capital growth or act as supplemental incomes, you must be willing to get out of the investment comfort zone and experiment on some of the high-risk high yield ventures we have listed here. This call shouldn’t, however, be construed as an invitation to join every other get rich scheme out there. Your high-risk investments should be well calculated and informed by data.
For instance, before investing in a peer to peer lending company, check the site’s average default rates, borrower screening process, and debt recovery procedures and only invest if you feel comfortable with either or all of these. And if you don’t know where to start, our list touches on different facets of the investment sector, you just have to consider what industry you are most comfortable investing in.
What is a high-yield investment?
A high yield investment refers to any investment option that promises significantly high returns. They will often pay higher than your average investment but will also carry significantly higher risks.
Is there a difference between high-yield investment and high yield bonds?
Yes, a high yield investment option is a general term used to refer to any investment option with promising returns while a high-yield bond refers to bonds that tend to pay higher-than-average returns. The high-yield bonds may in effect be construed to be a member of the high yield investment family.
How much can I make investing with a high-yield investment option?
The answer to this is relative to your choice of the investment option and how much you are willing to commit to the investment as well as market volatilities. For instance, if you invest in one of the peer-to-peer lending sites, you are assured of a near fixed-rate of return while there is never telling as to how much you can earn from an ICO or crypto trades.
Can I lose funds invested in a high return venture?
Different high yield investments bring along varied risk levels. They all have, however, made significant strides to ensure that even in the worst cases, the investors never lose their funds. This is achieved by insuring the deposits with a Fixed Deposit Insurance Corporation (FDIC), massive diversification, and such risk management controls as a stop loss and take profit features. It is, therefore, imperative that you first go through your investor’s site to check the risk management measures they have put into account.
How much should I invest in a high yield investment plan?
Most high yield investment options have elaborate investment packages with clearly outlined minimum initial deposit amounts. Others like crypto trading don’t have a minimum or maximum investment amount limits. Either way, we advise that you don’t invest more than you can afford to lose in any venture, no matter how promising or seemingly low risk it may appear.
Are all high-yield investments managed by experts?
No. While there is a crop of high yield investment options that are expertly managed by industry experts most are self-managed, in the hands of automated systems or both. Deciding on what’s best for you starts with a self-evaluation of your investing skills and availability.
How profitable is a peer to peer lending investment?
Most peer-to-peer lending sites have their annual rate of return on investments well above 10% per annum. The interest here, however, isn’t static but largely dependent on the borrower’s credit rating. In such a case, low-risk borrowers pay low interests while borrowers who are perceived high-risk pay equally higher interests.
Who regulates the high yield investment options?
All deposit-taking and investment companies in the United States have to be vetted, licensed, and monitored by the Securities and Exchange Commission (SEC). Every deposit taker is then insured and their actions closely monitored by the government-owned Fixed Deposit Insurance Corporation (FDIC). The different high-yield investments on this list are FCA regulated and some FDIC insured safe for the unregulated initial coin offerings and cryptocurrency trades.