Receive High Financial Yields at Moderate Risks

High risks are usually rewarded with high yield and low yields benefit from low risks. The crazy situation at the financial markets, however, has opened a unique window of opportunity to achieve high yields at moderate risks. Even companies that have received a good rating by Standard and Poor’s in a range of BBB to AAA struggle at the capital market. They have to offer attractive yields on their corporate bonds in order to raise capital.

Bonds perform better than stocks in these days

Now it is possible to have an insight in some performance reports of big investors. Their performances on stocks can be described as a massacre. Some have lost up to 40% on value on their assets in stocks. Such painful losses can be observed in investments in all relevant stock markets. Alternative investments as hedge funds, private equities, commodities also show negative returns for the year 2008.

There is an exception: investments in corporate bonds and government bonds. The bond portfolios have performed well, some performance figures vary between around 4 and 8 percent. These are the only performance reports that make the investors smile. Investors have been lucky who have shifted on time from equities to bonds.

Still juicy bond opportunities

Investments in corporate bonds are recommendable as long as the financial markets stumble in an uncertain future. They benefit from low inflation that even could tend to negative. This situation could go on during the next months. There is, however, a risk of high inflation because of the gigantic deficit spending by the states in order to fight the financial crisis. The bond party is over as soon as the inflation starts to pick up.

People who still dispose of enough cash may use the actual window of opportunity and invest in some good investment grade corporate bonds. The yields are high and the risks moderate as long as the yields exceed the inflation rate.

There are some good examples of freshly emitted, international corporate bonds: Rabobank with a triple A and a yield of 4.45%, E.On with an A and a yield of 5%, still investment grade Vivendi with a triple B and a yield of 7.6%. Attractive for the US investors look recently at the NYSE added Indiana Michigan Power with a coupon of 7% or Nevada Power with a coupon of 7.375%. Power suppliers belong traditionally to the most reliable debtors and show very low default risks. More about how to make money can be read and discussed at Make Money Tip.

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