Somebody may ask how such high interest rates are possible with high income fund investments. The answer is that such funds invest in low quality or low grade bonds. The risk of such investments are more than the so called high grade bond funds but still reasonable. So, these low quality bonds are suitable for small investing capitals and the investors with large amount of capital should turn to high grade funds because the payment by low quality funds is not guaranteed and they may don’t pay back the bond owners in a bad market situation.
Because of the average higher risk of these high income fund investment opportunities, the investor s should tightly manage their investments. Making a good diversified portfolio is a must for average investors and they have to manage their investments such that in case of a part of bonds going bad they can still be compensated by the rest of the bonds. Although diversification is a general strategy in almost all risky investments but it plays a very important role in this type of investment.

Another strategy to make the investment risk lower is time diversification. This means that the investor buy low quality high income fund gradually during all times of the year (i.e. spread the investment along all months of the year). For example, if you want to invest $60,000 in bond funds, you make this investment in $5,000 monthly increments. This way you will minimize the risk of investment in a bad market time.

Because of the nature of this type of investment (exact diversification and intense capital management and analysis), the investors usually can not enter to this type of business without help of an expert agency (fund manager). The key factors to select such managers are the reliability and reputation of the company and at the same time low rates of high yield fund management expenses.

Today, investment in high income funds is become more and more popular and many stock and equity investors take the advantage of this type of investment because it is much safer than traditional stock investment (has not the vast fluctuations of prices and is more liquid than small stocks). High yield fund managers are very professional investment analyzers and can diversify the bonds such that they nearly become risk free. If the average investor work with a well known fund manager (with the minimum expenses i.e. less than 1%), a very good investment return is quite possible.

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The return of such investments is directly related to the “economical growth”. So, in recession time when the companies stocks value drops, high yield bonds have the minimum return on investment. In contrast, high yield investment programs are some sort of investments in various activities which the return has not a direct relationship with economical growth. For example even in recession time the price of gold may increase and some high yield ventures which are involved in gold market still make a good profit.

In comparison to high yield investment programs, high yield bonds have a very lower profit rate for example 10%-20% a year and because of this they need a large amount of investment. In spite this, in high yield investments, because of a large profit return (i.e. 40% in a month), the investors need to invest a very smaller amount. The original investment returns in a very short time and because of this high rate of turn over, it seems that the growth of profit is exponential.

Unlike high yield investment opportunities which are available in any time, high yield bonds are usually offered and traded in a good situation of market and for this reason, a main part of investors with small and large investing capital may prefer to invest in other timeless investment ventures such as high yield opportunities. The seasonal investments are only suitable for investors with a very big capital and a good investment diversification. This can be a disadvantage from the small capital investor point of view, but when we talk about large investment, it worth that an investor wait to receive an offer from a large reputable corporation.

In comparison to HYIPs, the risk of high yield bonds is very small (almost negligible) and this is one of the few advantages that attracts especially big investors. In high yield investment, the investors should monitor their investment every day and the return is not guaranteed. This very high risk of investment is the biggest drawback of such type of investments.

All in all, high yield bonds or HYIPs have their advantages and disadvantages. Any investor may choose one of them according to the amount of investment capital, time and the risk. If an investor takes only the risk factor into account, he should pick high yield bonds, but if he can tolerate some risk in a good diversification he may turn to high yield investment opportunities. Only with a good balance between these factors the investors can be comfortable with their investments.

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