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Medium Risk Investment

1. Intro

Have known some low-risk investment method.

  • Bonds: 6 month 5%, limited to $10000
  • Money Market funds, APY 5%, no limitation

This would be my main low risk investment

Now I want to investigate medium risk option

  1. What options do I have
  2. What’s the pro and con of each of them
  3. Tax consideration

2. Options

  • Mutual Funds / ETF
    • Pro: lower risk, professional management
    • Con: management fee, lower return
  • Dividend paying stocks
    • Pro: Potential for regular income
    • Con: Not guaranteed
  • Real Estate Investment Trusts (REITs)
    • High dividend yields
    • Sensitivity to interest rate, market
  • Corporate Bonds
    • Higher rate
    • Credit risk, interest rate risk

3. REIT

Type:

  • Equity REIT: most, own and manage income-producing real estate. Revenues are generated primarily through rents
  • Mortgage REIT: lend money to real estate owner. Earnings are generated by the net interest margin

Pro:

  • Liquidity
  • Diversification
  • Stable cash flow
  • Risk-adjusted return

Con:

  • Low growth
  • Dividends are taxed as regular income
  • Subject to market risk

4. SP500

SP500 is just an index, the true trader should be the company

Two biggest

  • SPY: better for institutional trader
  • VOO: lower ratio, better for personal use, invest and hold

5. TODO

  • Buy Treasury Bonds: 10000
  • Manage HSA account
  • Learn more about medium risk option: 8000
    • ETF
    • REIT

6. Trading

Buy MKT: market order, current market price, the price is a little different

Buy Ask: precise current lowest price, but may take longer

Buy Bid: precise current highest price, may take longer