"Yield -- the Higher the Better"

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What is Investment Yield

The normal way to measure the income you receive from income investments is through the annual yield on investment.

Investment yields are generally expressed as a percentage. For example, 20%, 5%, .8% and so on.

The easiest way to think of investing yield is how much you're getting paid for every $100 you invested

If an investment pays you 10%, you'll get $10 back for every $100. These days, that's pretty good. If an investment pays you 5% annual yield, you'll get $5.

Obviously, all other things being equal, a higher average investment yield is better than a low one.

However, all other things are NEVER equal.

If one investment pays 10% and another pays 5%, you should ask yourself, "Why would anyone in their right mind invest their money for 5% if they can get 10%?"

If you can't figure that out, it's because the 10% paying investment is riskier. The investment must pay a higher amount than the 5% investment to attract money.

So, in comparing the many different kinds of income investments, you must always keep in mind that some are riskier than others.

Those that are riskier, must pay more money

Because why would anyone in their right mind invest their money for 5% at high risk if they can get the same 5% yield in a low risk investment?

So, what amount of yield on investments is "correct?"

There's no simple answer.

Some people simply accept more risk than others do. Some investors don't realize that their money is in riskier investments. (If they're lucky, maybe they'll never learn the hard way.) Some people accept more risk because they're younger and have more time to make up for loses. Some people stay in low risk, and therefore low yield, investments because they're elderly, cannot work and fear losing what little money they have.

So a lot depends on who you are:

Your age

Your income and prospects

Your accumulated assets

Your health

Your dependents

Your personality -- what's called risk tolerance

Your knowledge and understanding

This site is dedicated to giving you the knowledge and understanding you need to make the best income investing decisions for your particular, individual situation

And there's certainly no easy answers.

As a general rule, the older you are, the less risk you should take. However, retired people need more money and so want to get higher yield financial yields.

You need to understand that for income investing yield refers to cash in your hand NOT an increase in the price of your investments.

Let me repeat that, because it's fundamental to the investing philosophy of this site --

We're after spendable cash money -- NOT paper profits

You may (and often should) choose to spend the money on buying more of the same financial investment, but you're still investing NEW cash.

New cash is money in your pocket which you didn't have before. You can buy a new bag of golf clubs, go on a cruise, pay your gas bill or buy yet more of the initial investment.

But you still had new money.

Yield on an investment is like a pay check you get every 2 weeks from your job

A rise in the price of your security is like your boss's competitor having an increasing amount of respect for the job you do.

That's nice, but it doesn't pay your bills.

And the only way it can pay off for you, is to quit your current job and go to work for the competitor for a higher salary.

That may be a good idea and maybe you'll do it -- but until and unless you do, that respect from your boss's competitor won't pay your bills.

Next, learn a way to can increase the yield of your investments: Leverage

Now download The Death of Capital Gains Investing, your first step toward experiencing for yourself the joy of securing your retirement through income investing!

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