Different Types of High Yield Investments

Reviewed: July 16, 2014
By FinanceWeb

In good times or bad, people are always on the lookout for investment opportunities that generate significant returns. Living paycheck to paycheck, only able to put a small amount in a low-return savings account, does not build or increase wealth. High yield investments are the ones that produce high returns on investment.

High Yield Investment Options

People who invest in the financial markets would like to see the highest returns on their investment. Including high return investments in your portfolio is a wise decision. Although there are no guarantees when it comes to investments, whether you invest in stocks or bonds, there are some high yield investments that can deliver profits, or returns, that are more generous than the returns from traditional investments. There are many types of high yield investments that you can choose from. Usually, the more complex or risky an investment strategy is, the higher the chances for huge returns.

Real Estate

Real estate has always been a highly profitable venture, and many people have amassed great fortunes in this industry. Even when the real estate market is at its lowest points, due to predatory loans or a bad economy, those who have the money to invest can profit tremendously buying low. Whenever a market has taken a big hit, investors whose who have money and patience can go to work buying up houses and making their future fortune. This type of investment should be considered as something that will produce a huge return in the future.

Stock Market

The stock market experiences tremendous highs and lows, but a sound investment strategy will always pay off. Those who plan well and do their research properly before investing in the stock market are the ones who enjoy huge returns. Those who dive in, trying to get rich quick, without having a good understanding of how it works, are usually left penniless. It is a good idea to consult a professional and get proper guidance on how to make wise investments in the stock market.

Private Business

People can invest in a private business as angel investors or venture capitalists. These are high return investments where the investor pours a significant amount of money in a company or project in return for a huge share in the profits.

Angel Investor – Instead of receiving a specific cash payment in return, the angel investor has equity in the company. The investor has the right to participate in the decision making process for the company and takes a percentage of the profits. Becoming an angel investor requires sufficient experience in business and investing. It is also useful to have management experience in the industry in which the investor wants to get involved.

Venture Capitalist – This is an investor who provides a specific amount of capital to an entrepreneur for a small startup business. This type of investment yield higher return than a standard investment. The agreement with the company outlines the specific rate and the time frame for repayment. In some cases, the venture capitalist will either expect a share in the company, or a certain percentage of profit.

Considerations

You should be aware of how much money you can stand to lose prior to choosing high-return investments. Even though high yield investments are designed to produce big returns, if the investment strategy does not work out well, the investment will become a failure or losing proposition. It is advisable to use a risk/return profile to determine how much risk you can afford to take on and what returns you expect.