7 Secrets to Successful Income Investing

Secret #1 – Don’t Be a Sucker for Yield

What’s the first thing you look at when considering an investment? If you said the current yield, you’re not alone. All too many income investors check the yield — and nothing else.

This is fine if you’re looking at government-insured CDs, but outside of guaranteed returns, yield alone is a tricky guide. Real estate investment trusts (REITs) are a great example. It used to be common for REITs to pay a whopping 10% or more. But some of the business practices might give you pause. With the market chaos and housing collapse, many REIT owners are now finding themselves the proud owners of a bunch of foreclosed properties generating little or no income. Get details on one REIT that’s bucking the low-yield trend here.

The bottom line: Whenever you see a juicy yield, consider the risk factor. Whether it’s default risk (the chance that the investment might not pay your money back) or market risk (the possibility the resale value of the investment might drop if interest rates go up), it pays to investigate before investing.

NEXT – Secret #2