Safe High Yield Investing - 3 Tips

A lot of investors go by the 'buy and hold' form of investing which is just when you research a company, find the right one and buy the stock with the idea of keeping that stock as part of your portfolio indefinitely. If you are someone who prefers a more active trading style you may want to find safe high yield investing so you can make money in the short term.

One of the most popular financial instruments for achieving a high yield while keeping your money safe is a high yield certificate of deposit, or CD. This is perfect for anyone who is more concerned with not losing the money they already have than for those who are trying to make a lot more money. You likely won't make much money with this method but the money you invest will be a lot safer than with other forms of investments.

Here are some things you should keep in mind when shopping for a high yield CD:

1. The first thing you want to do is find the highest interest rate you can. While none of these CD rates will be overly high, even a quarter of a point difference can add up so make sure you take the time to find the CD with the highest rate currently available. You can do this by going to Bankrate.com which has a list of institutions and the interest rates they are currently paying.

You may also want to take a trip down to your local bank. It's always a nice thing to support your local economy.

2. Another thing you will want to consider when choosing a CD is the length of the term. How long will you need to keep your money invested in the CD? The terms can vary from a month or two all the way up to 5 years or more. Generally the longer the term the higher the interest rate. This is because the bank can earn a lot of money on your money since they will lend it out to homeowners and other people who need a loan. The longer they can use your money, the more they will make and the more they will be willing to pay you.

Make sure you understand that if you take your money out before the maturity date you will pay a significant penalty. This penalty will be a large percentage of your interest. Be realistic when choosing maturity dates.

3. Most banks will require fairly significant amounts of money to open a CD. It's usually at least $1,000 and very often it's more. If you don't currently have enough money to open a CD you can always start with a savings account and then transfer that money into a CD when you have enough saved.

Just remember to be very careful with any investment you make. There are always people around who love to promise something that they can't deliver and take your money from you. Carefully research various forms of safe high yield investing and remember that a CD may be the best way for you to go.