Recently I read THE 25% CASH MACHINE by Bryan Perry, which described ways to invest for income that most people have never heard of: real estate investment trusts (REITs), Canadian business trusts, Canadian royalty trust, business development corporations, closed end mutual funds (I'm not sure why this is a classification by itself, since the profitability or income yield of any given closed end fund is going to depend on what the fund invests in and how well it's making money, not on being a closed end fund per se), profitable sectors (now likes shipping of oil and bulk materials) and master limited partnerships.
One reader gave feedback on Amazon about how this book should come with a warning label, since it's established financial theory that to get more income you must take on more risk, so anything that pays so much income must have high risk -- Q.E.D.
I'm not defending the book itself -- I thought it described most of those things much too sketchily. I still have many more questions than answers, especially for the more exotic stuff. REITs are well-established and gaining accepting an investments. Besides, you can buy books that do a good job of explaining them. The same is not true of Canadian business trusts, royalty income trusts, business development corporations and master limited partnerships.
But the concepts do seem legitimate. I haven't done all the research I would have to do before investing my money, but I'm not writing them off just because their pay a lot of money.
After all, if every investment gave off the same amount of income given the same degree of risk, every investment would have the same Sharpe ratio and that would be a useless figure, because constant throughout the investment world, and that's just not true.
Isn't it possible some of these investments have high yields because so few investors know about them?
risk and yield
risk and yield
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