What to buy these days.... ETFs, CDs, Preferreds

For those who are looking to do something with their money rather than holding a position all in cash, I might have the answer for you.  An ETF (exchange-traded-funds) allows you to invest in the market like a stock, but it will follow the index's more closely.  There are numerous ETFs out there.  Take for instance, if you think the financials are going to continue to fall I would suggest investing in the ProShares UltraShort Financials (SKF).  This can be a risky position as this ETF tracks the DJIA that correspond to twice (200%) the inverse of the daily performance of the Dow Jones U.S. Financial Index.  There are many ETFs that can meet the investing strategy for your portfolio.  A benefit of investing in an ETF is the relative low expense ration compared with Mutual Funds.

Other notable ETFs:

SSO, FXI,IVW,GLD,PFF,DVY

CDs have long been the most conservative way to invest with no risk and little reward.  If you have some extra cash laying around you can put in in a CD yielding an APY of 2-3%, but if it was me I would head to DollarSavingsDirect.com and open a savings account giving an APY of 3.20%.  This pays much better than a CD and your money is always available!

Preferreds are a great play considering you are investing between a stock and a bond.  A preferred acts as a stock in the way it can go up or down.  However, like a bond it can pay a high dividend that can provide an income stream. You can find some really good companies yielding a 7-10% APY.  These dividends are negotiated and do not change or fluctuate over time.  In the case that the company preferred you bought goes belly up, you are obligated to receive payment before "stock" shareholders. Preferreds sell at $25 (considered par) and have a call date usually 5 years down the road.  Some preferreds have a "call" structure built in... so be aware.

Note: Preferreds carry a risk rating by standard & poors, fitch, and moody's

Notable Preferreds:

JPMpI, GEG, GSpB