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I'll preface this with a disclaimer: I don't have a million dollars and I am not an investment professional. That said, as an amateur investor, my gut says tha
by byoung2 13y ago
I'll preface this with a disclaimer: I don't have a million dollars and I am not an investment professional. That said, as an amateur investor, my gut says that with the fed keeping interest rates low for the short term, you won't see 5% without taking on some risk. With the 10 year treasury at about 3% [1], that's about the best you will see for the time being as far as low-risk investments go. Slightly more risky but still pretty safe would be AAA corporate bonds, which are currently 4.6% [2]. To get to 8 or 10%, you'd have to get pretty risky, and go with junk bonds, or high yield dividend stocks like REITs (I've gotten 11% returns over the past 3 years with these). If you want anything higher, then you'd have to take on more risk than I have the appetite for, like angel investing.
1. http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield http://www.treasury.gov/resource-center/data-chart-center/in...
2. http://research.stlouisfed.org/fred2/series/AAA http://research.stlouisfed.org/fred2/series/AAA
- mrfusion 13y agoCan you recommend some good REITs for high dividends? Is there anything special you do when researching them?
- byoung2 13y agoLike I said, I'm just an amateur, so I wouldn't be qualified to recommend any stock in particular. I signed up for a an account at dividend.com and looked at their ratings to see what to invest in. Anything above 20% seemed too good to be true, so I focused on a few with yields between 10 and 15% that had long histories of paying out.
- mrfusion 13y agoI always assumed anything that pays over 5 or 6% these days has some fundamental problem and I should stay away. Is that not necessarily the case? Why aren't more people buying good high dividend stocks and pushing the yields down?
- byoung2 13y agoREITs are different from normal stocks in that they get a tax break if they distribute at least 90% of their taxable income to shareholders each year, so their yields are much higher. REIT yeilds (and stock prices) should continue to rise now that housing prices are rising, and the overall improvement in the economy is creating growth in commercial real estate.