The Seven Sins of High-Yield Investing

Sin #1: Buying Open-Ended Mutual Funds

This statement may come as a shock to most investors, but if there is a choice to buy a certain index or sector closed-end fund
instead of an open-end fund, opt for the closed-end fund.

First of all, with the Dow showing triple-digit point swings on an intra-day basis, you never know when you may want to exit
the fund if the market makes a dramatic move up or down. With an open-end mutual fund, you can only sell at the end of the day.

We’ve lived through a few sessions this past year where the Dow opens higher by 200 points in the morning only to plunge by
400 points by the close.

Maybe having the ability to exit one’s funds during the day makes way more sense than having to wait
until the market is closed before being able to punch out of a meltdown.

NEXT: Sin #2: Paying Big Premiums Over Net Asset Value