Financial Investments: Choosing A Good Appropriate Stuff

When is 3 percent better than 6 percent? Yeah, we all know the answer, but only until the prices of the securities we presently own begin to fall. Then, logic and mathematical acumen go away and we become susceptible to all kinds of special cures for the periodic onset of greater interest rates.

We'll be told to sit in money until rates stop rising, or to sell the securities we own now, before they lose even more of their precious Market Value. Other specialists will suggest the purchase of shorter-term bonds or even CDs to stem the tide of the perceived erosion in portfolio values.

You'll find two critical issues that your mother never told you about Income Investing: (1) Higher interest rates are excellent for investors, even better than lower rates, and (2) Choosing the right securities to take advantage of the interest rate cycle isn't particularly difficult.

Greater rates are great for investors, particularly when retirement is a factor in your investment decisions. The more you get for your reinvestment dollars, the more likely it is that you will not need a second job to maintain your lifestyle.

Picking the best securities to take advantage of the interest rate cycle is not particularly difficult, however it does require a change in focus from the statement bottom line as well as the use of a few security types that you may not be 100% comfy with.

I'm going to assume that you simply are familiar with these investments, each of which could be considered (from time to time) for a spot in the properly diversified Income Portion of your Asset Allocation:

(1) The traditional individual Municipal and Corporate Bonds, Treasuries, Government Agency Securities, as well as Preferred Stocks.

(2) The eyebrow raising Unit Trust varietals, Closed End Funds, Royalty Trusts, and REITs.

The market rules that apply to these are fairly predictable, but the capability to create a safer, higher yielding and flexible portfolio varies significantly within the security types.

So do a little analysis and spread your dollars around the many management businesses that are on the market. If your counselor tells you that all of this is risky, tell them to look into corporate debt restructuring before you restructure your investment plans.

In the meantime, keep doing your own personal research on restructuring finance and investment plans to yield exceptional returns.

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