Q. I am not happy with the checking, saving, money market account and CD's saving rates today. What other higher yield investment products I could consider?
A. To get higher yield, you will have to take higher risk, and go after some not household name investment products.
We will introduce some of them, from low yield to high yield order, in this High Yield Investment Products 101 series.
First, the Floating Rate Bank Loans.
These products, as you can tell by the name, are bank loans to companies. But these companies tend to be ones with not good credit ratings, therefore the loans' interest rates are normally a few percentage points higher than the benchmark (LIBOR), and reset every 60 to 90 days.
Because of the periodic adjustments, these products hold up well when interest rates are rising.
If you want to purse them, given the complexities associated with them, it's best to buy a mutual fund that invests in such products, such as Fidelity Floating Rate High Income (FFRHX).
Stay tuned for our Part B.
A. To get higher yield, you will have to take higher risk, and go after some not household name investment products.
We will introduce some of them, from low yield to high yield order, in this High Yield Investment Products 101 series.
First, the Floating Rate Bank Loans.
These products, as you can tell by the name, are bank loans to companies. But these companies tend to be ones with not good credit ratings, therefore the loans' interest rates are normally a few percentage points higher than the benchmark (LIBOR), and reset every 60 to 90 days.
Because of the periodic adjustments, these products hold up well when interest rates are rising.
If you want to purse them, given the complexities associated with them, it's best to buy a mutual fund that invests in such products, such as Fidelity Floating Rate High Income (FFRHX).
Stay tuned for our Part B.
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