In the world of high-yield securities, investors on a quest for the biggest yields are often lured into securities that either they don't understand or are simply tempted beyond their personal discipline to investigate how that yield is being supported.
If you can't identify where the "Yield Power" is that makes the king-size payouts possible, then they should avoid purchasing them.
So how do you know which ones to avoid?
There are some big red flags to be aware of that can trap an investor and ruin their long-term portfolio. They are known as the Seven Deadly Sins of High-Yield Investing.
Click on each one to learn more.
Sin #1: Buying open-ended mutual funds
Sin #2: Paying big premiums over net asset value
Sin #3: Receiving a return of capital
Sin #4: Buying into managed distributions
Sin #5: Owning securities with high payout ratios
Sin #6: Getting paid in special dividends
Sin #7: Buying domestic energy trusts