Beware the High-Yield Siren Song

You may have heard that in the investment world, risk and reward are inextricably linked.  While there are few rules of thumb for investing that hold much water, the risk-reward adage is one that’s best learned by everyone.

But there’s more to it than that.  High risk does not guarantee high reward.  Nor does low-risk mean “no risk.”  Too often, people tend to chase after a potentially high reward while ignoring the risk side, and are surprised when the results don’t pan out.

In this week’s Lucia Capital Group Weekly video, our “Professor” Rick Plum, CFP® talks about the dangers of “chasing yield,” and why forces beyond your control may unexpectedly create more risk than you’re willing to tolerate.

Important Information:

The information provided should not be considered specific tax, legal, or investment advice and is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

You should always seek counsel of the appropriate advisor prior to making any investment decision. All investments are subject to risk including the loss of principal. This material was gathered from sources believed to be reliable, however, its accuracy cannot be guaranteed.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy securities. Investment products described herein may not be offered for sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful or prohibited by the specific offering documentation.

No client or prospective client should assume that the presentation (or any component thereof) serves as the receipt of, or a substitute for, personalized advice from Lucia Capital Group or from any other investment professional.

Money market mutual funds, though traditionally lacking federal insurance and not without risk, are highly regulated under federal law.

CD’s are FDIC insured up to $250,000 per depositor, per insured bank, for each account ownership category.

It is important to keep in mind that investments in fixed income products are subject to liquidity (or market) risk, interest rate risk (bonds ordinarily decline in price when interest rates rise and rise in price when interest rates fall), financial (or credit) risk, inflation (or purchasing power) risk and special tax liabilities. Interest may be subject to the alternative minimum tax. Treasury securities are backed by full faith and credit of the U. S. Government but are subject to inflation risk.

Rick Plum is a registered representative with, and securities and advisory services offered through LPL Financial, a registered investment advisor and member FINRA/SIPC. The investment professionals are affiliated with LPL Financial and are conducting business using the name Lucia Capital Group, a separate entity from LPL Financial.

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