Investment Opportunity Set Options

An individual might decide to invest in a business.  The business might produce a steady stream of income (monthly for instance) that is much higher than the normal investment like a certificate of deposit or a treasury bond.  This would represent the difference between a high yield investment opportunity set up for the retirement oriented investor and a low yield investment opportunity set up for the retirement oriented investor.

Risk in Investment Opportunity Set Options

An important consideration is the risk factor.  As most people are aware the amount of risk associated with government backed securities (treasury bonds) is basically nil.  The reason is that the United States government issues the security and backs their value.  The only real risk is the United States government defaulting on their debt payments (like treasury bonds) and if that happens there would be a slew of other issues confronting the investor besides their treasury investment.  I think we can assume that will never happen and we should also hope it never happens. 

The risk factor with investing in a single high yield investment opportunity set up for the retirement oriented investor, like a small business, is that the single high yield investment opportunity (like a small business) could fail.  Since we are discussing small businesses as a high yield investment opportunity set up for the retirement oriented investor let us examine this as a representation of a single investment. 

The failure rate of small start up companies is high (fewer than 4 out of 10 make it beyond 3 years according to some reports) and putting funds into such a business is risky.  As with any high yield investment opportunity set up for the retirement oriented investor, the individual is seeking either a higher stream of income or a higher rate of return.  However, it is unlikely that any investor would like to lose their initial investment and that is why alternatives to investing in a small business exist.

Reducing Risk for the Investment Opportunity

Diversification is a concept that has evolved from being an unknown factor in the world of investing into something that is part of most individual investor’s vocabulary.  Diversification is a an investment strategy designed to reduce exposure to risk by combining many different investments, such as stocks, bonds, and real estate, which are not likely to increase or decrease in value at the same time.  The goal of diversification is to reduce the risk in an individual’s portfolio.  Volatility is limited by the fact that not all asset classes or industries or individual companies move up and down in value at the same time or at the same rate.  Diversification reduces both the potential increase and the potential decrease and allows for more consistent performance under a wide range of economic conditions.

The most popular form of diversification and the easiest to understand is the use of mutual funds.  Mutual funds represent a great opportunity for individuals seeking a high yield investment opportunity.  A mutual fund is an investment that pools together numerous stocks, bonds, and other securities to perform as one investment.  Mutual funds pool money from many investors and place the money in stocks, bonds, or other securities.  Mutual funds can also invest in a combination of the three. They are managed by a professional portfolio manager who actively adjusts the funds' portfolio to try to increase their value.

An individual could participate in a high yield investment opportunity set up for the retirement oriented investor via mutual funds.  Investing in mutual funds would reduce the risk associated with individual company stocks and give the investor the opportunity to participate in the potentially great gains afforded in a high yield investment opportunity set up for the retirement oriented investor.

High Yield Investment Opportunity Set up for Financial Independence

Any individual seeking to gain financial independence should take a look at a high yield investment opportunity set up for the retirement oriented investor.  There are many different investment vehicles that can be used as a long term investment opportunity and a few have been discussed in this article.  The key is to remember that a long term investment opportunity is just part of an overall plan to achieve financial independence.