July, 23
by RT

Your Retirement Nest Egg: 7 of the Safest Investments for Retirement

Investing for retirement is paramount, but you need to make the right moves. Here are some of the safest investments for retirement.

Your Retirement Nest Egg: 7 of the Safest Investments for Retirement

Working yourself to the bone for 30+ years without a good savings account to lean back on or an investment plan to support your retirement can limit your financial protection during your senior years This is why depending on a single source of income will expose you to the risk of losing it and becoming financially dry.  Never leave your future financial security to chance.

Waiting for the unknown is scary when it leaves you struggling and fundless. It's up to you to ensure you have enough to support yourself once you stop working. 

Take a look at the safest and most widely used investments tools for retirement and diversifying your income sources. Get started now and allow yourself a better footing for your retirement. 

1. Stocks

As of this year, the total market value of all stocks is around US$90 trillion, traded through 60 stock exchanges around the world. There are more than 9.6 million traders worldwide. These figures are strong indicators that the stock market is highly profitable - if traded right.

There are two ways you profit with stocks. First is when you invest in a company's common stocks. This makes you a part of the whole of a company. As a shareholder, you are part-owner. This gives you the rights to claim part of the income the company makes, depending on how many stocks you own.

The amount doesn't matter, even a few bucks have the potential to turn into more and appreciate in value. You can sell those stocks to get these gains. 

Stocks are generally safe to invest in, but you still want to do basic research and find companies worth investing in or look up stock advice.  

Another way to profit with stocks is when companies release dividends to their shareholders. Money is paid out on a routine schedule which is normally each quarter.

In the long run, stocks outperform most other forms of investments. This will help you make the most money for your retirement.

Trading with stocks requires discipline. In the words of the 'Dean of American Banking', George F. Baker:  "To make money in stocks you must have the vision to see them, the courage to buy them and the patience to hold them.”

2. Bonds

Buying a bond is when YOU loan the government or the company for a certain amount of time. When they pay you back, you receive profit in interest at a specific date (called maturity date)  that you both agree on when you first decide to pay for the bond.

You get paid two amounts through the bond: the interest, which is paid to you at fixed periods (twice a year, once a year or monthly). You are also paid the principal amount at maturity date. How long and when this date will be is up to you and the business. In regards to security, government bonds would be a safer choice for people seeking decent profit and beginning investors. 

Among the key benefits of investing in a bond is its low volatility, high liquidity (you can cash it), legal protection (from the government or the company you invest in), besides having a variety of term structures

If you want to greater rewards, there is a greater risk, but there's more profit potential with business bonds. You should invest in high-quality corporations and understand you can buy and sell shares every day. If you feel its shaky, you have a choice to drop or reinvest into it again later.  This makes the bond legally protected, because if a company or government goes bankrupt, you will still receive some money back (called the recovery amount) as a bond holder.

Also, different bonds fit different needs:

 

Convertible bonds: A bond which you can change into stock shares (in the same company) or cash

Zero coupon bonds: This is a type of bond that  you can buy at a price lower at its original value, then get paid the face value at maturity.

Inflation-linked bonds: These kinds of bonds are directly linked to inflation levels. So if you buy the bond at $100 and inflation increased by maturity by 10 percent you get paid $110. This protects your investment in situations of inflation.

3. Index Funding

Index funds are a type of exchange-trade or mutual fund. It allows you to track returns of certain market indexes, like S&P 500 Index. It's a hand-off and easy way to monitor and measure the performance of what is doing good and not so good in the market. 

While there's no way to invest in index funds directly, learning about it provides an indirect investment option that can make investing for retirement easier. This passive form of investment maximizes return over time.

When you buy into index funds, you receive a well-rounded selection of stocks in one package. There's no need to buy separately. Index funds are managed by professional brokers to allow greater returns as funds from investors (like yours) are pulled. 

4. Contribution and IRA (Individual Retirement) Plans 

Everyone knows about contribution plans and IRA (Individual Retirement) plans. You may already have it, but if you don't you should consider it.

Most contribution plans include 401(k) plans or 403(b) which is is a common retirement plan most employers offer. It is a tax-advantaged plan that allows you to safe for your retirement.

Money accrued there is tax-free until drawn at retirement. Early withdrawals though come with penalties.

IRA plans are another great retirement plan that also provides tax bread as you invest for your retirement. 

5. Gold and Silver

In the past year, the price of Gold increased by 32 percent. The price of silver increased by 37 percent. This is solid proof that Gold, silver, and other precious metals are a great way to invest in for the long run, because their value is relatively stable over time. Setting up an account is very similar to having a basic IRA account except you are getting with metals as an asset. 

This is a great option for your investment portfolios to protect yourself during times of inflation. When you have an account, you have to decide on a metals dealer. Then you must choose what products to buy and store at an approved depository. You profit when your metals are purchased and sold, but you have the option to liquidate your metals when you choose. 

6. Rental Housing

Investing in rental property can be an excellent source of income and result in major profit when done right. The only thing you must take into consideration is that you have to be willing to be attentive towards your property.  This means you (or someone you hire) should be able to take care of any maintenance needs or unexpected expenses. 

Prior to purchasing a rental, you should calculate the potential expenses and profit. This is a business investment so if you have no experience, its best to read books on real estate or speak with experienced investors.

7. High-Yield Savings Accounts

Savings accounts provide a guaranteed return, but high-yield saving accounts can boost this return in solid numbers. For some high-yield savings accounts, the interest rates are 20 to 25 times higher than traditional savings accounts, mostly available through online banks.  You can monitor all your cash online as it grows. There are also fewer overhead costs compared to traditional banks that offer certificates of deposit (CD)

Since you can earn higher interest rates with the money you put in, you can profit faster. You won't incur penalties if you draw your funds at any time. This makes high-yield savings accounts are one of the safest forms of investment. Losing money is a rare scenario. 

Before you invest in a high-yield savings account, here’s what you need to consider: minimum balance requirements, initial deposit requirements, interest rates and any account fees set by the bank.

Make Your Money Work For You 

Everything you own becomes an asset only if it provides you with return. The money you make has the potential to provide you financial security and gain when you allow it to work for you through investing. Make sure you look into things like stocks, bonds, money, metals, trading, and estate now. They are the most widely used investments for retirement and can boost the potential return of your current income.

Whether you have $1 or $100 don't just let it sit idle in your checking account. Invest it and make it work for you.

If you found this article helpful, please check out either blogs on our website. 

 

Comments

Send a comment