Strategies For Getting Higher But Stable Yields
Saturday, September 6, 2014, 1:00 AM | Leave Comment
In either recessionary or booming economy, there are certain investments that can give you higher and more stable yields. Some investments that are backed by United States Treasury can give you better results over the long haul. In your portfolio, consider to include them. First, make sure the cash portion for your portfolio is really working for you…
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Treasury Notes
These are commonly issued with maturities dates between 1 to 10 years, with denominations of $1,000. Go with the maturity half-way such as 5 years. You can buy them in banks with commission or directly from Federal Reserve at no charge. Find your closest Federal Reserve District.
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Treasury Bills
T-Bills are for those who don’t want an extended holding period. T-Bills gives better yield than short-term CDs especially when you consider that interest from T-Bills are exempt from state and local taxes. You buy T-Bills the same way you buy Treasury Notes.
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Certificate Of Deposit
You buy CDs for convenience and the fact that you can buy them in person. However, before you buy, shop around. These days, the return is very low so go for 6-month or at the most 1-year CDs.
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Money-Market Funds
Again, money-market funds don’t give much return these days. But do consider to include them in your portfolio.
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How To Figure Your Own Returns
Take an investment’s current value, subtract its value from one year ago and divide the result by the value from one year ago. The answer is the return for the year.
For example, if a stock was worth $1,000 one year ago and is worth $1,150 today, your return is 15% ($1,150 minus $1,000 divided by $1,000).
Conversely, if your stock was worth $1,000 one year ago and is worth $850 today, your return is negative 15% ($850 minus $1,000 divided by $1,000). That means you have lost 15% of your investment.
In a Nutshell
The economy is hopefully out of recession. But in a recession, CDs and Money-Market Funds give lower yields than some other investments. So if you do invest in them, go with 6-month or maximum 1-year maturity.
