Better than ordinary shares, safer than bonds
The income investment I’m about to reveal gives you the opportunity to…
Decrease the risk in your portfolio
Add income in the form of dividends
Add income in the form of share price growth
Bonds and ordinary shares don’t have these qualities combined.
You see, with shares, income (dividends) isn’t guaranteed. And with bonds, as soon as interest rates head upwards, bond prices collapse.
That’s why this income investment is the perfect way to add all three qualities to diversify your portfolio.
The perfect income investment revealed…
I’m talking about preference shares.
With a preference share you get the chance to loan money to some of the largest companies on the JSE. And they’ll compensate you for it.
As a preference share holder, you are in a better position than an ordinary shareholder.
This is because the company will pay you ‘dividends’ for the money you loan it. And, in the unlikely situation where the company is unable to pay you, the dividend will roll over to the next year, and it then needs to pay you double!
And the nice part is, the income you could receive on your investment is guaranteed.
There’s a wide selection of preference shares available to investors
And if you invest in it, you’ll receive twice yearly interest payments of at least 11.4% a year.
That’s more than every money market fund and four times more than the JSE All Share yield.
What’s more, there’s a high possibility SARB will increase interest rates again in 2017.
And when that happens – because it’s linked to the interest rate – it will not only pay you more income will also rise in value!
In the end, preferred shares offer safer dividends than stocks and higher returns than bonds. That’s why they play an essential role for your portfolio and you must at least invest a portion of your money in them.
Until next time,
Always remember, knowledge brings you wealth,