A myriad of retirement investment options are available, but the problem lies in finding the proper ones for you. No one formula can guarantee that you land profitable investments, but you can spread your retirement savings among different assets that align with your objectives. The two primary purposes of Retirement Investments are:
- Provide Enough Income to support an acceptable quality of life
- Outlast You
Thus the key is to find the proper mix of investments that will meet these two primary objectives. You to find investments that will both outperform inflation and grow your asset base because each year the life expectancy increases so you will probably live longer than you currently expect. Experts now predict that you may need to fund life for 20-30 years after retirement.
Individual Stock Trading
Trading doesn’t have the same complexities it used to only a few years ago. With online brokers, just about anyone can start buying and selling stocks. Even though an individual of 50+ may need a bit of training to use an online platform, the learning curve is not a steep one. You get to pick which shares to buy without necessarily paying a financial advisor unless you feel you feel you need one. Unfortunately, as an individual stock investor you are competing against professionals so the chances of an amateur outsmarting a professional are slim.
Stock Funds or Exchange Traded Funds (ETFs)
One step removed from individual stocks are Stock Funds (Mutual Funds) and Exchange Traded Funds. You can still buy them through your brokerage account but they have the advantage of having the individual components chosen by professionals or being chosen to mimic well publicized indexes. So you could buy a fund that performs similar to the New York Stock Exchange (NYSE) or NASDAQ or a smaller segment of the market such as the DOW Utility or Transport Index. According to Investopedia The Key Differences Between ETFs And Mutual Funds is that “When you put money into a mutual fund, the transaction is with the company that manages it… Vanguard, Black Rock, etc., …The purchase is executed at the net asset value of the fund based on its price when the market closes that day or the next if you place your order after the close of the markets.” But “ETFs trade on exchanges, just as common stocks do, and the other side of the trade is some other investor like you, not the fund manager. You can buy and sell at any point during a trading session at whatever the price is at the moment based on market conditions, not just at the end of the day, and there’s no minimum holding period.”
Real Estate
Despite lingering doubts due to the real estate crash of 2008, real estate assets can provide security and income when you know how to pick them. Retirees have a number of options when it comes to the property market. You can invest in rentals, commercial buildings, or co-ops. Just take the time to understand how the market works. Be cautious about the type of assets you put money in and find professional services to work with. Just like buying stocks buying Real Estate requires that you do your homework and treat it like a business. Unlike stocks however every market is different and thus “hidden gems” are available for the taking all that is required is the ability to locate them and dig them out. Real Estate agencies like RE/MAX River & Sea in Oregon, provide resources that can help you appraise potential investments and determine whether they are appropriate for your portfolio. Other methods of investing in Real Estate include a less “hands on” approach such as investing in Real Estate Investment Trusts (REITs). These are much like mutual funds for properties and they specialize in everything from single family homes to commercial properties to storage units.
Income Annuities
Annuities are the go-to choice when in need of income during retirement. These insurance products guarantee that you have money coming in by investing in advance. Annuities are not all the same; some generate immediate income, there are fixed annuities, while others offer deferred income options. Your choices at the time of purchase determines the timing of the income. The great feature of an annuity is that you can purchase one that is guaranteed to pay for the rest of your life no matter how long you live.
Bonds
Buying bonds means you are lending money to a municipality, government, or corporation. You charge an interest and receive your principal lump at the date of maturity. Bonds are available as individual products, mutual, or exchange-traded funds. Decide beforehand if you are getting short-term, mid-term, or long-term bonds.
Contribution Plans
The different kinds of contribution plans available cater to the unique demand of different individuals. 403bs And 401ks are popular choices because they don’t demand a lot of work and are reliable. You make contributions to the plan from your monthly income, and the employer matches it. Note that withdrawals from some contributions such as a 401 k incur taxes.
Diversifying your investment assets is the safest way to make your retirement funds work for you. Find more than one fun way to bring in an income and take the time to work on getting the most out of it.
You might also like:
- Annuities– Are annuities the greatest thing since sliced bread? Well, no, but they do make sense for some investors…
- Why We Downsized Before Retirement
- The Personal Finance Perks of Aging: 15 Tax Breaks You Enjoy After 50
- Retirement Tips You May Not Have Considered
- More Articles on Retirement Finances
From Amazon: