View Full Version : Boring investment question
09-11-2004, 09:25 PM
What is a good investment if you want something safe with as high a yield as possible, putting safety above the yield? Well, some risk is ok (20% drop from initial investment or something like that, etc). But nothing like priceline with its 98% value drop.
T-Bills, Bonds, CD? I was hoping there would be an established mutual fund that focuses on dividend paying blue chips but I am not sure if there is or if there is if it is safe.
God I'm cool.
09-11-2004, 09:28 PM
What about an REIT? I hear with the baby boomers dying in the next 30 years real estate prices will burst (I find this kind of morbid to talk about it like this but ah well) but for the next 20 years or so they should be good.
Are there any established REITs to pick from? Are there any established mutual funds that focus on stable high dividend stock?
09-12-2004, 12:31 AM
I am not an investment professional, and there are enough on these boards that I am hesitant to make too make recommendations for fear that they’ll point at me and laugh, but if your primary focus is on capital preservation, you can consider the following:
Treasure bills. I have never heard of a greater then 20% drop, but re-read my disclaimer above. On the downside, as interest rates go up, the price of bonds go down, which means if you have to sell them before maturity, you may lose money. In addition, they may actually be paying less than inflation right now, so you’d be losing money, albeit slowly.
Inflation indexed treasure bills (I bonds). These pay quarterly at a rate set by (I believe) the Fed. They pay about 3.5% right now; inflation plus a modest ROI.
REITs were a really good idea in 2001; I think they are generally considered over valued against underlying assets, but read your prospectus carefully, etc etc. REITs are sensitive to interest rate changes; this is something to keep in mind with the Fed expected to raise rates.
There are mutual funds that track the S&P500 (which dropped around 20%). Be warned that dividends for the S&P500 are really low – something like 1.5%.
There are diamonds, which are stocks that represent the DOW 30. These are called Diamonds, and trade under the stock symbol DIA. A moderately recent column on them can be found at http://www.fool.com/News/mft/2004/mft04010923.htm?ref=foolwatch These currently yield 3.5%, and are as stable as the DOW, which may have high volatility than you are looking for, but should be generally stable. Luckily, the time frame between 1999 and 2004 is rough enough that a basket of stocks is unlikely to fall that hard again for the next few years.
Again, I’m not a professional, but didn’t want to see the thread sink without a trace. Please research any of these options carefully, remember that you’re taking investment advice from some guy on the internet, and please don’t sue me if it doesn’t work out.
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