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Investing Tips

Investing in retirement may seem daunting. Plummeting stocks constantly create news headlines and many retirees donít feel confident in their ability to invest without expert advice. Safety and potential income are two key features of any investment you make, especially in retirement. No one wants to work for years planning for their retirement only to find they havenít saved enough to cover all the expenses.

Financial experts advise that retirees interested in a portfolio start off by building a collection of six to eight different types of investments. In order to reduce risk, your best bet is to invest in long-term investments that are conservative, yet income producing. A good goal to set while thinking about investments is ensuring that you have enough saved up to cover day-to-day expenses. This may require you to work for a few more years or turn part of your savings into cash to invest in the short term. Knowing these costs are covered beforehand will allow you to invest more confidently and comfortably.

Understand your situation

To begin on the path to retirement investing, first look at the sources of your income and the flexibility of your budget. Are you living solely off your savings, Social Security, a pension? Understanding how much flexibility you have with your spending will allow you to set a limit for investing. You may also want to ask yourself how much of a risk you are willing to take. While most of the suggestions below are low risk, any investment poses the threat of not returning as much as you may have originally hoped.

Buy an annuity

An annuity is a long-term investment that you purchase from an insurance company. It is designed to help protect you from the risk of outliving your income. This is especially helpful in retirement because unexpected expenses may arise, so having a bit of savings will be beneficial. With an annuity, the issuer takes on any market losses and your personal longevity. Through annuitization, whatever you contribute is converted into periodic payments that can last through retirement. One drawback is that fees can add up and returns may not be as high as you expect when first starting out.

Stocks and bonds

You can build a simple portfolio of stocks and bonds without much financial knowledge. There are many resources online that you can access and plenty of low cost options to start with. Itís important to remember not to purchase too many bonds; you likely have twenty years or more to plan for. Stocks will likely face inflation, but investing this way will help finance your retirement.

Investing in retirement is not much different than investing any other time in your life. Simply, you want to invest wisely in order to gain cash over time. Following these tips will allow you to be ready for retiring comfortably while remaining prepared for any expense that may arise during this exciting lifestyle change.

 

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