Best high-return, low-risk investments?

[midlifeman]

Even though you have to pay back depreciation when you sell the rental house it is clearly a benefit until then. Anytime you can reduce your taxable income and put more money in your pocket is an advantage. This gives you leverage or what I like to call buying power to keep on building your empire.

Those of you who can't stomach Residential should consider commercial real estate investing. There is no work. Triple Net leases insure that the tenant covers the taxes, insurance, maintenance, and the rent. You just sit back and collect a check.

You can also do a 1031 exchange to convert those current residential properties you own over to a commercial. This avoids the capital gain tax and keeps you in the game. Remember the game of monopoly? It's all about trading up.

[mathjak107]

anyone planning on building that empire better have large deep pockets to carry you thru both unexpected repairs and renovations and those bad tenants.

pretty much all those highly leveraged no money down authors are now bankrupt ... real estate takes a lot of cash to succeed and most folks fail at it because like any business they fail to realize how much money it will really take to hold on.

in our case we ended up having to lay out lots of dough buying out rent stabilized leases at a cost of 50-100k each in our investment co-ops... that wasnt in the origional plan but then again the origional plan turned out to be less than the profits we anticipated. so we switched gears and decided to make far greater profits by selling them but it took more cash then we ever dreamed.

[zz4guy]

The big mistake people make investing in real estate is managing it themselves when they expect it to be a passive investment.

If you don't want to deal with tenants you need to hire a management company. If your investment can't make money after paying a professional management company, then it is not really an investment.

I buy, fix, hire a professional management company, and hold.

[ragnarkar]

1) Pick a stock index, major commodity (gold, oil, silver, corn, etc.), currency, etc. You can use the corresponding ETF as well. Don't pick individual stocks! Pick something that is clearly going up or down, not something without any direction.

2) If you have more than 3000-10000 to invest, go with 2 securities that fit the criteria above. If you have 10,000 - 100,000, go with 3 securities. 100,000 to 1,000,000: 4 securities. 1,000,000 to 10,000,000: 5-6 securities.

3) Apply the Turtle trading rules to the letter: http://www.metastocktools.com/downloads/turtlerules.pdf (at least if you have no clue.) If you have some idea of what you're doing, you can twist these around within reason.

[KnowItAllJoe]

High yield has consitently outperformed stocks over the last 20-years with half the downside risk and volatility. See the facts at the following link:
[mod edit - 10 post to link off site]

Additinally, don't make the common mistake of overweighting your investments asset classes that did best over the last 10-years. Those spaces tend to be fairly valued or even over valued which leads sub-par returns. For example, investment grade bond prices are at a historic high and their go forward yields/return potential is at a historic low. The same goes for emerging markets right now. I'd only have a 10-20% allocation there at most because it appears fairly valued if not over valued. If the dollar continues to fall, it will help this space. However, I'd play it with a high yield bond fund like MFS Emerging Market Debt (MEDIX) instead of a stock fund like Oppenheimer Developing Markets (ODMAX) because the risk/return for MEDIX is so much higher. Bottom line, you should be significanlty underweight investment grade bonds now.

Instead, look forward at what will deliver the best returns over the next 10-years. Corporate balance sheets are the strongest they've been in decades. Over the next few years default levels will most likely continue to decrease. The bigger risk to fixed income going forward is rising interest rates. Investment grade is very sensitive to rates. High yield performs well in a mild-moderate rising rate environment. Although, yields on on high yield have decreased, spreads over treasuries and investment grade are still well above non-distressed levels and you're still being over compensated for the risk in the space. You should be overweight high yield bonds now.

A fund like Catalyst/SMH Total Return Income (TRIFX or TRICX) couples high yield bonds with convertible bonds, high dividend paying stocks, REITs, MLPs, BDCs and covered call writing strategies. It offers the best return potential in what will most likely continue to be a slow growth environment for developed countries. Incepted in May 2008 it was ranked #2 out of 3,836 Morningstar balance funds for 1-year total returns as of 10/11/2010.

[mrkool]

Originally Posted by KnowItAllJoe

A fund like Catalyst/SMH Total Return Income (TRIFX or TRICX) couples high yield bonds with convertible bonds, high dividend paying stocks, REITs, MLPs, BDCs and covered call writing strategies. It offers the best return potential in what will most likely continue to be a slow growth environment for developed countries. Incepted in May 2008 it was ranked #2 out of 3,836 Morningstar balance funds for 1-year total returns as of 10/11/2010.

These funds have 5.75% front load. Not good.
Unless you can *guarantee* superior and consistent returns to compensate for this load. And you can't.

[jhtrico1850]

LSBRX Loomis Sayles Bond won Morningstar Fixed Income in 1991 and 2009, 9% over 10 years, Pimco Total Return PTTDX is just a little behind with less volatility.

On the equity side, YACKX is great too, 12% annually over 10 years. All no loan.