Yield Chasing is the practice of investing in high-yielding securities or other income-generating investments in an effort to maximize the current income received from an investment portfolio.Yield chasing often involves investing in higher-yielding, but potentially riskier, securities, such as junk bonds, real estate investment trusts (REITs), or high-dividend stocks. Investors who engage in yield chasing may prioritize current income over long-term capital appreciation and may be willing to accept a higher degree of risk in order to achieve a higher yield.While yield chasing can be an effective strategy for some investors, it can also be a dangerous strategy for those who are not experienced or familiar with the risks involved. High-yielding securities may carry higher credit, interest rate, or market risk, and can result in significant losses if not properly managed.Additionally, yield chasing can also lead to overvaluation of certain high-yielding securities, resulting in a bubble-like market dynamic where prices rise as a result of high demand, but ultimately come down as investors realize the underlying risk.It's important to remember that yield chasing should be approached with caution, and that a well-diversified portfolio that takes into account both income and long-term growth is often a better strategy for achieving investment goals over the long-term.
