Fixed incomes

[chinaco]

You can increase the return by taking on more risk which generally means a chance of loss... either to principal, opportunity, or liquidity (i.e., cost to cash out).

You did not describe much about your situation in the post. When will you need to spend the money?

If you invest the assets in bonds or stocks be sure to diversify.


Careful chasing yield on interest/inflation sensitive securities... especially now.

[dex]

Quote:

Originally Posted by huusom To be specific, I need to generate around 3K per month to live reasonably well (not much but I'm not a big spender). How much principle do I need to generate this kind of incomes? Thanks,

You can lose principle several ways:
- Inflation
- Market price decline
- Default of bond/CD (in excess of FDIC insurance) issuer

One way to determine how much money principle you need is to look at returns for various investments and compute the principle needed from there. Then determine which investment meets your risk criteria.

E.g.
CD - 3 % apx 1,200,000
High Yield Corp Bonds - 9% - 400,000

You also could do a combination of the investments.

What do you think?

[lowflyer]

Quote:

Originally Posted by huusom Hi all: This question may have been asked before but beside CD which is currently at next to nothing. I have about 200K cash that I want to put to work. What type of investments do you recommend that can generate 3 to 5 percent return and distributed quarterly with minimum risk.

I also like Preferred Stock, but you really need to do your research on the companies you invest in. You might believe that preferred stock is inherently safer that common stock, but if the company has issues, the preferred can suffer right along with the common and your nice, safe dividend might be at risk. Also, like most fixed-income investments, over the past six to 12 months, prices have been climbing, so there aren't very many deals out there. Regardless, they are worth a look.