High Yield Investing

In today's volatile market, high yield investing requires a cool head, a lot of homework, and a strong heart. When stock markets fluctuate erratically on a daily basis, it is difficult to know what to buy; but there are some undervalued stocks which could prove profitable in a relatively short time. "If any of you lack wisdom, let him ask of God, that giveth to all men liberally, and upbraideth not; and it shall be given him" (James 1:5). High yield investing might include buying junk bonds, those which are issued by corporations that are not yet rated by Standard and Poors or other agencies due to the fact that they are too new to gauge market performance. Called junk bonds because of a less-than-perfect or non-existent rating, such instruments may earn great returns, but with a greater risk than investment grade bonds and securities from long-standing companies rated BBB or higher. 

A rule of thumb for novice or professional investors is: The higher the yield, the higher the risk; because investors really don't have a record of performance to know how speculative stocks and bonds issued for new and emerging enterprises will fare. Adventuresome traders may be unsure of how stocks and bonds will perform, but optimistic about high returns because of the potential for innovative ventures to arouse attention and gain financial backing. And while high rollers can take risks with junk bonds, retirement fund managers are prohibited against high yield investing in stocks and securities issued by un-rated companies. 

Several emerging markets may prove fruitful for high yield investing. Due to the popularity of green technology as an answer to global warming, investors may want to jump on the bandwagon and experiment with investing in what could become a lucrative market. They reason that up and coming industries, such as alternative energy, biotechnology, or sustainable agriculture can spawn off numerous companies and create jobs for a large sector of the population nationwide; and more jobs means greater profits. As researchers search for a way to make the United States less dependent on foreign oil, nearly any business connected with alternative energy usage could turn out to be money maker. The automotive industry benefits by manufacturing and selling new hybrid vehicles, which utilize less fuel and depend partially on battery power. If conservative trends continue, more consumers will trade in gas guzzling SUVs for hybrids, boosting sales and causing stocks to skyrocket. High risk takers will no doubt reap the benefits of investing in new corporations that focus on saving.

Sustainable agriculture (SA) is also a field ripe for high yield investing. A method of utilizing resources interdependently, sustainable agriculture maximizes land usage and valuable resources without destroying the environment. An example of SA could be a fish farmer's decision to construct breeding ponds in a corner of his cornfield so that water overflowing or seeping from the pond can be used to irrigate the cornstalks. At the same time, husks from harvested cornstalks, which were irrigated by catfish pond reservoirs, are used to feed cattle. And the cattle are eventually slaughtered and used to feed the farmer and his family. Wise investors may choose to invest in sustainable agricultural industries by buying commodities futures, even though there has been an insufficient time to gauge SA successes in the stock market. Buying stocks and bonds related to green industries is also socially responsible investing, which yields more than monetary returns, but also a safer, greener environment for the future.

As long as man relies on a safe and viable food supply to survive, agricultural enterprises should thrive financially. Researchers and food producers may gain the attention of investment companies, money makers, and private citizens who can see the advantage of buying stocks in businesses which grow genetically-altered livestock or disease-resistant grain. The nation's breadbasket states which have endured droughts, flooding and a subsequent loss of land mass in recent years, and foreign countries undergoing agricultural crises due to climatic changes both seek ways to protect food supplies. High yield investing in corporations which are being formed to support sustainable agriculture, biotechnology, or research to safeguard national and global food supplies from bioterrorism may pay off huge returns in the short run. 

If private and public investment companies have time to wait, certificates of deposit also make good options for high yield investing. Some banks, credit unions and savings institutions offer CDs from three to six months or one to five years with interest rates as high as 7.5%. Investors who can afford to wait several years until certificates of deposit reach maturity can realize a substantial return. Long term investment instruments also serve as an excellent hedge against inflation and a safe place to put money, especially in light of volatile domestic and foreign markets. Another advantage of investing in CDs is that they have a fixed interest rate and are not subject to market highs and lows. 

While high yield money markets are normally a good bet for investors, the bad news is that they are subject to stock market fluctuations. Short term two-year and five-year government-backed securities, such as Treasury bills and bonds or mutual fund bonds may also produce higher yields than money market accounts, because they are not tied to interest rates. Whatever vehicle individual or professional brokers choose for high yield investing, it's best to do thorough research into the companies which issuing stocks, bonds or securities to assess an ability to remain solvent in uncertain economic times. Companies with superior ratings may bottom out and bonds can become worthless overnight. Newer emerging corporations may have excellent potential to earn high returns, but with equally high risk. Investors who are unsure about which route to take should consult with professional financial planners before making a move which could prove fruitful or fruitless in the long run.