If you’re a conservative investor, then you probably like the idea of 4% fixed returns. The problem is that the majority of traditional investment vehicles don’t offer anything close to that. Even if they do, you’re taking a huge risk that is probably not worth taking at all.
The only industry that is offering fixed returns with little to no risk is the mortgage industry. Every time a homeowner pays their monthly mortgage payment, they are helping out Ginnie Mae by repaying their loan. That helps Ginnie Mae keep funding up and funneling money to investors.
This is a risk-free investment because the Ginnie Mae Guarantee, which is a government backed bond that is guaranteed by the government. In fact, if you want to enjoy higher returns, the United States Treasury will also back up your Ginnie Mae equity in order to get that return to 4%.
Investing in the Ginnie Mae market is not for the inexperienced investor and certainly not for the impatient one. But, for the risk taker, this investment sector can reward them with consistent returns and the satisfaction of having done a good deed by investing in the nation's housing retirees.
The first risk factor that you should be aware of is the high volatility of the Ginnie Mae market. A risk-averse investor should consider this before committing to any Ginnie Mae investment.
The second factor to consider is that the Ginnie Mae market is volatile, which is based on many factors: political and regulatory risks, economic factors, interest rates, and the mortgage market. These factors are always in flux and can greatly impact your investment.
The third factor to be aware of is that the Ginnie Mae market is small compared to other markets. Because of this, it is illiquid. Liquidity is an issue because it can cause pricing swings based on the size of the transaction, among other things.
The main risk factor to consider is the significant reliance on the mortgage market, interest rates, and home prices. So, a downturn in the economy, housing market, mortgage interest rates, or all of the above can greatly affect your investment.
In Stocks – What Are The Rules?
The conventional wisdom is that the only way you can become a wealthy investor is through mutual funds. What most people don’t realize is that there are basically two camps concerning mutual funds. One camp believes that they are the best way to get returns with minimum effort, and the other camp says that the price you pay in terms of loss of control is too high.
If you are interested in getting great returns, you should focus on investing in stocks instead. The most important thing to remember is that you have to follow a few key rules. The trick to great stock market investing is that you have to follow a few basic rules.
The first rule is to invest in stocks that are solid blue chip stocks. Blue chip stocks are proven products with great track records and strong leadership. The other option is to invest in a diversified portfolio of stocks. The downside to this option is that you have to spend a lot of time figuring out which stocks are the best ones to invest in.
Never invest in a stock simply because you’ve heard a lot about it or because it has a fancy sounding name. It’s also important that you know the difference between economy stocks and growth industry blue chip stocks. Growth industry blue chip stocks are those involved in industries with identifiable growth prospects.