High Yield Bond Investment Returns Against The Risk

Over the last few years there has been an increase in the number of people who are nervous about taking a financial risk with any form of investment. However, with the economy stabilizing, many Canadians have once again begun thinking about investing. Segregated funds, offered specifically by insurance advisors, have become an attractive option for many who have a low appetite for risk. But what if you are looking for a bit more return? A high yield bond offers many attractive benefits with a higher end yield. Whether you are looking to generate income for retirement or just want to invest with less risk than equity investments, a high yield bond is a great option.

What is a high yield bond? Like all other bonds, high yield bonds are debt securities issued by different organizations in order to raise funds. By purchasing a bond, you are effectively lending your money to that organization in exchange for interest and a guaranteed return of either all or a significant portion of your initial investment.

Demand for these fixed-income investments is steadily increasing, often because of their various benefits. Some of the benefits of a high yield bond include.

-        Higher interest rates - Since high yield bonds are accompanied by a higher level of risk, they pay higher interest rates than investment-grade bonds in order to compensate.

-        Win-win scenario - When the company that you invested in makes gains, bond prices increase, thereby increasingly the value of your investment.

-         Measure of stability - The income component of the return of a high yield bond is larger, meaning that your risk is lessened.

Still, the risk is there, and if you are still a bit hesitant a high yield bond segregated fund might be something to consider. A high yield bond segregated fund, which holds bonds issued by several companies, allows you to invest without putting all of your eggs into one basket. At the same time the benefits remain, as does the return.

What if you want to invest but are unsure as to how to go about doing it? High yield bonds can be tough for the average investor to navigate, especially if you have no previous experience. That is why it helps to have someone in your corner that can both talk you through your investment options as well as manage them. An experienced insurance advisor can offer you the advice you need and assistance you want to get your portfolio started.

For more information about investing in high yield bonds, please contact Independent Financial Concepts Group by calling 416-849-1653 or visit www.wecoveryou.ca.