Chasing Yield Can Bite You
January 1, 2022
It’s no secret there’s a lot of capital chasing yield right now. With historically low interest rates in the U.S. for a few years, many investments are seeing diminished returns.
As a small or new private lender, you may often battle it out against larger, institutional capital offering super-low interest rates to your best borrower prospects. On the other hand, keeping your reserves in a CD at a bank often yields returns well below inflation, especially with the current economic outlook in the U.S.
Given these choices, individual investors and investment managers may feel desperate. Wanting to at the very least keep up with inflation and at best find ways to keep money growing faster than increases to cost of living, many are on the hunt for high-yield investments. And, often they don’t fully consider or appreciate the risks that may accompany those higher returns, which also aren’t guaranteed!
So, where does all this leave you?
Published in American Association of Private Lenders’ Private Lender Magazine Q1 2022 – page 6