High Yield Bond Funds In Comparison To High Yield Investment Opportunities
Posted on April 21, 2010
Filed Under High Yield Bonds | Leave a Comment
High yield bonds are a sort of income or capital investments which as is obvious from the word “bond” are investment return liabilities which take mainly by big corporations (mainly in high return industries such as nano-tech, pharmaceutical, micro electronics and communication).
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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