Investments: Deciding On The Appropriate Investment Option

When is three percent better than 6 percent? Yeah, we all know the response, but only until the prices of the securities we already own start to fall. Then, logic and mathematical acumen vanish and we become vulnerable to all kinds of special cures for the periodic onset of greater interest rates.

We'll be told to sit in cash until rates stop soaring, or to sell the securities we own now, before they lose much more of their precious Market Value. Other gurus will recommend the purchase of shorter-term bonds or even CDs to stem the tide of the observed erosion in portfolio values.

You'll find two critical things that your mother never ever told you about Income Investing: (1) Higher interest levels are good for investors, much better than lower rates, and (2) Choosing the right securities to benefit from the interest rate cycle is not particularly difficult.

Greater rates are great for investors, especially when retirement is a factor within your investment decisions. The more you receive for your reinvestment money, the more likely it is that you won't require a second job to maintain your lifestyle.

Picking the right securities to reap the benefits of the interest rate cycle is not particularly challenging, but it does demand a change in focus from the statement bottom line as well as the use of a few security types that you simply may not be 100% comfy with.

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

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

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

The market rules that apply to these are fairly predictable, but the ability to produce a safer, higher yielding and flexible portfolio can vary considerably within the security types.

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

At the same time, keep doing your own analysis on restructuring finance and investment plans to yield outstanding returns.

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