February 16, 2013
A good stretch can be just what the doctor ordered. Yoga — which involves more stretching than most activities — is great for health. But stretching can go too far. You can strain things, or even — in the case of reaching on a stool for an item high up on a shelf — potentially fall, break some bones or worse.
The same can be said about seeking a steady return on investments. With interest rates in the basement, safe fixed-income investments such as GICs are paying a paltry couple of percentage points, barely keeping pace with inflation.
So a little stretching for yield — from dividend stocks, corporate bonds and income funds — isn’t a terrible thing. It can be a very healthy ‘exercise.’
Yet all this stretching for yield is getting a little out of hand, many market observers agree. The extreme thirst for income in a desert of low returns is pushing investors to extremes — all the more now that some of the riskiest assets in the income market, high-yield bonds and dividend stocks, have had some good years.
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Source: Winnipeg Free Press