"The Risks to Investors of Fixed Income Investments"
Don't envy me -- Join me!
This site contains the pieces of the income investing jigsaw puzzle -- now get the Big Picture so you secure your financial future by creating an ever-growing income from investing
All financial investments involve risk. There's no way to escape it. Stuffing cash into your mattress carries the risk that a burglar will find and steal it from you.
So the trick is to manage risk so that even if some part of your money is lost, you still have enough to carry on. The more money you have, the easier that is.
The risks of fixed income investments are:
1. Repayment risk -- the investment can't (or won't) pay you back.
2. Prepayment -- you're paid back too soon.
3. Reinvestment -- once your money is returned to you, you have no place to put it that pays a high yield. This logically follows after the prepayment risk.
4. Interest rate -- they can change over the course of your investment
5. Inflation/Loss of purchasing Power -- this is actually the worst risk faced by fixed income investors over the long term.
6. Reinvestment -- you're paid back but don't have any equally desirable opportunities available.
7. Liquidity -- you would have trouble selling the investment if you needed or wanted to.
8. Event risk -- something totally nonfinancial happens. For instance, if you own a Chicago municipal bond and terrorists spray plutonium over all of the city, you've got a big problem even if you live in Texas.
9. Sector risk -- when the economy goes down across the entire country, all local governments collect fewer tax revenues. When the price of gold is low, all gold mining companies are affected.
10. Regulatory risk -- this is especially important to utilities companies, which are highly affected by local regulatory agency decisions.
Click to watch brief (30 second), exciting video on finding financial freedom through investing for income . . .
Now experience for yourself the joy of securing your retirement through income investing!
Want more income -- now or when you retire? Get your free eCourse:
Learn the Secrets of Investors Who Make Money in Both Bull and Bear Markets . . . Good Times and Bad!
Before the subprime mortgage mess makes stock market goes down more . . . before the stock market goes up, making dividend paying stocks more expensive . . . before the rising cost of gas, gold and food -- and the sinking U.S. dollar -- put the world into a recession . . . before retiring baby boomers start selling off their growth stocks . . . before you need investment income just to eat!
7 Reasons to Invest for Income -- NOW More Than Ever
Rick Stooker
- The greatest secret to income investing (Einstein called it "The most powerful force in the universe")
- What -- historically -- gives stock market investors 1/2 of their total returns (from 1929-1954; 1966-1981; and 1999-mid-2008 it was the ONLY way to make money from the stock market!)
- How to avoid suffering from accounting fraud. Automatically keeps you from throwing you money away on future Enrons, Tycos, and WorldComs
It's easy. Just enter your first name and email address into the form below.
(NOTE: I greatly respect your privacy. I will never sell, rent, share or give away your email address to anyone. There is no obligation. You can unsubscribe at any time. After you click the button, you'll be taken to a page to thank you.)
Or, you can subscribe to the 7 Reasons to Invest for Income Now More Than Ever RSS feed. Just click on the orange RSS feed icon below:
Disclaimer:
I am not a financial advisor. I am not a broker. I am not a financial planner.
I have no professional licenses.
I am a wide reader and an independent thinker and this site gives my opinions on the subject of income investing.
Nothing in this site is to be construed as professional advice.
I am not responsible for the results of your investment decisions.
Past results are no guarantee of future returns.
You must read, think over what I say, make your own investment decisions and take responsibility for your own life, including the results of your investment decisions.
Continuing to stay on this site implies your acceptance of these terms.
