High Yield Fixed Income Investments
When you are seeking income from your investments rather than equity growth, you are naturally interested in getting the best possible return on your money. Safety is also a prime consideration, especially if you are retired and depending on fixed income investments to live on. High yield fixed income investments come in many forms. It's a good idea to become familiar with the different types of high yield fixed income investments and to create a diversified portfolio to minimize risk.
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CDs
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CDS are the safest form of high yield fixed income investment because they are insured bank deposits. CDs pay better rates than savings accounts but usually less than bonds.
Annuities
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You purchase an annuity from a financial institution which then provides periodic income payments either for a fixed term (such as 20 years) or for life.
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Corporate Bonds
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"Blue chip" corporate bonds carry limited risk and are among the highest yield fixed income investments. Income (called the coupon rate) is usually paid semi-annually.
Government Bonds
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Treasury bonds and other government bonds carry minimal risk and have good yields. Many also have tax advantages as well.
Tax Free Bonds
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Municipal bonds issued by state and municipal governments are usually exempt from all taxes, so the net yield often compares favorably with corporate bonds.
Preferred Stock
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Preferred stock is a special type of stock that carries less risk than common stock, and features guaranteed dividends plus the possibility of some equity growth.
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