The low interest rates are an impediment to high yield incomes and savings
The investors and consumers usually target to attain the high yield earnings through their savings and CD instruments. As the interest rates are lowered by the bank, the savings and money markets are low on liquidity. Then, as the CD rates are so dependent on its erstwhile 4-5% yield, the investors are left wondering as to whether it would be better option to take on additional risk and wait for a higher yield or settle down with the lower yields.
Here are certain alternatives for the investor:
- He can go in for the high yielding savings and CD accounts. When a bank is unable to compete with their competitors, they are apprehended as ‘bad’ by the investors due to their high interest rates. They are then compelled to cut their rates.
- The high yield municipal bonds can also work pretty well. There are other investment instruments with a wide array of alternatives that presents tax-free income options. The risks also get aptly diversified with the superior performance of some of the municipal bond ETFs. They may not be as high as that of a healthy economy; still the 8% mark is appreciable during a financial recessionary period.
- The high yield bonds ETFs are alternatively known as junk bond’ ETFs and they offer a handsome payout. The high yield stocks are also a great option. Income can be generated from selling puts and calls too.