High Yield Safe Investments

Right now is the time to be as safe as possible and unless you are in cash, gold or govvies (government bonds), you will lose money. You need to be ultra-defensive! Gold, cash and government bonds were in fashion and at the expense of the modern art, private planes and yachts which were more in vogue for the uber rich during the boom years.

Right now, you need to focus on real assets, financial investments, Not high yield risky investments.

Are the days of high yield investments over? The facts are that there has been an incredible mismatch between risk and reward in our world's markets over the last 10 years. So, comparing what returns were realized yesterday to today is really a mute point going forward in the future.

I think we all agree that despite the bad news pouring out of the world's financial markets, the worst may not be over yet, nor is it completely clear that the recent $700 billion bail out package is enough to stop market bleeding. Right now the stock market is playing out "a classic fear or greed scenario right now." While it has been fear of the unknown magnitude of losses in complex mortgage-backed securities and credit swaps that has driven the Dow down by more than 25% in just one year, eventually "people will most likely get bored with running scared, and there will be a herd mentality back in the markets.

Then you will see a classic real upside-only scenario. But the questions of the day are, "When is this going to happen and what are the safest high yield investments to place your money in?"

Mortgage-Backed Securities (MBS) were incredibly desirable high yield investments in the past with the upward surge in housing prices in the first half of this decade. For much of this decade, the demand for non-investment grade paper-offering greater earnings than much less risky AAA-rated bonds-was so high that high-yield debt seemed immune to the laws of supply and demand.

The traditional rules of risk and reward for investors had collapsed over the last decade, especially with the bundling and trading of home loans that, in too many cases, went to buyers not worthy of credit in the first place. This trend can be tracked back to the shady economic times of the 1990s, which caused investors and regulators to ignore common sense investing strategies and the most important factor of RISK vs. reward.

In the past Wall Street firms, Goldman Sachs (nyse: GS ) and Morgan Stanley (nyse: MS ), have survived the market turmoil as stand-alone banks in what is known as the shadow banking system, but the recent move to reclassify them as traditional bank holding companies will severely limit their ability to make high-risk, high-yield investments. That, in turn, will reduce their ability to post the massive profits that these investment houses were reporting earlier in the decade.

In a survey on CNBC, it is being reported that 86% of investors with a $1 million net worth are actively seeking out new investment and financial advisors to invest their money with. Apparently investors feel they have been burned by the greedy brokerage houses that didn't accurately disclose risk and "clearly" didn't have their best interests at heart.

The problem now is finding a broker who can trust in this scary market?

It is painfully obvious that the "glutton" era of high yield risky investment snake oil like the Mortgage Backed Security are over and the search for high yeild safe investments is on and this blog, InvestmentSafe.org is hot on the investor trail looking for the best and safest place to invest.

Another option for dividend seeking investors is investment trusts - companies, listed on the stock market, that buy shares or other assets in the hope that they will grow in value. Some pay dividends of over 10 per cent. And these funds, some of which are run by Britain's leading money managers, offer the advantages of diversification into many different shares (or other assets such as bonds) and a possible discount to the value of the underlying assets.

But before you rush to sell your bank shares or empty your savings account and buy a stack of high-yielding investment trusts, do your homework thoroughly. While many have solid foundations that should see them through the current turmoil, some face serious problems, such as over-indebtedness, that could see their dividends evaporate and share prices collapse.