High Yield Investment - never done it before, how do I get into it?

AndiW_2

Thanks everyone for all your help and advice, I will read that information as it looks really helpful. I will invest when infully understand everything so I don't end up wasting money. Thanks again.

Loughton_Monkey

AndiW wrote: »

Thanks everyone for all your help and advice, I will read that information as it looks really helpful. I will invest when infully understand everything so I don't end up wasting money. Thanks again.

Only invest for the longer term. Values go up and down all the time. History shows that a 'good' portfolio will ultimately out-perform inflation - and certainly 'savings' rates. But in the shorter term, your capital is not safe.

Be very wary of High Street Bank products. These are so-called 'Structured Products' that purport to offer you guaranteed vcapital, plus Stock Market growth. These are very complicated, very bad value, and not what they seem.

And 'High Yield' has little relevance to most people these days. Many people (and the article quoted above I think) tend to use the word 'yield' to mean dividend income. When investing for the longer term (e.g. a pension), then dividend income is of no consequence whatsoever, because it would normally be re-invested. That's why virtually all pension funds are called 'accumulation' funds.

But even if you are investing for income, then these days, 'High Yield' means very little. Buy £30K of funds and assume they pay a 'high' dividend of 5%. That's £1,500 income. But the £30K might not grow very much. In another 'low yied' fund with little dividend, the £30K might grow to £40K. You can cash in £1,500 worth and still be much better off.

jamesd

The Motley Fool's High Yield Portfolio is pointless. During discussions here it was shown to have done less well than the Invesco Perpetual High Income fund, but has higher risk due to lower diversification and lack of a manager to move out of companies that turn out to be a bad idea.

It's one of the ideas imported from the US that doesn't translate so well for the UK, which doesn't have higher taxes on shares held for less than a year.

pqrdef

AndiW wrote: »

Ahh this is not what I imagined, I heard about a website called hyifund.com

There's high yield and high yield. This outfit is paying over 1% per day. Is it a Ponzi scheme? Is that legal?

jamesd

What the site operator apparently does is reset the balances of accounts to zero periodically. Since you can't ever take out the money you have paid in, just any income, that means you lose the paid in money before you've had more paid out than you paid in.

In this type of scheme the Ponzi schemes are regarded as the good ones: those who get in early can make money. This one isn't even "good" at that level unless you make money by referring other victims.

Those who get in early on a Ponzi scheme that is criminaly investigated don't actually make money. They have to repay any gains above the money they paid in, because they are the proceeds of a crime.

Reaper

It's been said already above but just to clarify...

High Yield Investment - could be any investment but typically a share paying a good dividend.
High Yield Investment Program (HYIP) - a fraudulent ponzi scheme. There are whole web sites devoted to them for people who want to invest, do a Google search for HYIP and be amazed and rather saddened by how many there are and how many people fall for the lure of 1% a day interest rates or more.