I have $5,000 to invest - probably for only a couple of years, until my 16 year old goes to college.A broker has recommended floating trusts, but I'm not sure I understand her explanation.Can anybody help me out?
I am aware of a few royalty trusts--in oil, timber, coal, iron ore--that are traded on the exchanges. These unit trusts offer very high yields--often in the 10-15% range. However, risks are high. Often you lose all or part of your principle. Sometimes your dividends more than make up for the loss.There probably are numerous other kinds of trusts, so get the details, and check them out before you decide.Generally, if the $5K is a small portion of your assets, OK maybe a trust is a reasonable way to diversify. Otherwise, if the money is dear to you, the risk is too high. For $5K, CD's or bonds that mature when you will need the money make more sense.