Nowadays the term “retirement” is accompanied with a sarcastic chuckle. How can anyone feel safe enough to retire in today's market? There is hope yet, though — with the proper investments and planning you can set yourself up for a secure retirement. Here are 6 investments you should make so that your money ages just like a fine wine.
When considering a portfolio strategy, one of the best ways to augment cash is through municipal bond investments. The major benefit to investing in municipal bonds is that they are tax-free. Although the bond yield is usually lower than its alternatives, not having to pay taxes can justify the decision. The one thing to consider is where you fall on the tax bracket. If you are higher on the tax bracket than a municipal bond is much more favorable.
Are you feeling like being a little more risky with your portfolio? Junk bonds can have some of the highest yield. Although they do present some risk, you have the potential to receive more bang for your buck. Even if you build your portfolio around security, you can still include junk bonds to help increase the overall result.
With the downturn of the housing market came an excellent opportunity for retirement income. Investment properties can serve as an excellent source of financial security when done correctly. The concept is simple: You buy a rental property in a popular area and then find tenants to live in the unit. You have to cover the upkeep and some expenses, but the monthly income will serve huge dividends.
Annuities are one of the more popular investment products retirees can use. Every annuity is different and the payment method can be monthly, quarterly, annually, or even in a lump sum. Essentially what you do with an annuity is pay into an insurance product prior to retirement so that when you are ready to retire the investment pays back a specified dividend.
To get a better idea for what your payout could be use this annuity calculator by Fisher Investments. Annuities are definitely a great investment for retirement because the payback is reliable and predictable.
Closed-End Funds or (CEFs) are also a great investment for retirees looking to find a stable source of income. These funds are traded much less than their counterparts and are not the first option most financial planners suggest. However, an effective CEF strategy is perfect for a retiree because the income is given at a fixed rate. There is potential for volatility and complacency with a CEF but if you manage it properly this investment can have a substantial yield.
Smart 401k Withdrawing
Nowadays, 401k is almost a taboo in our society. People rarely stay in the same company for several years and an unstable economy makes trust in the government very low. However, an effective 401k strategy can be a sufficient retirement investment. The big question about 401k is “when should I take it?” This is going to be different based on the individual, but if you have a strong timing formula for when you want to start withdrawing you are likely to pull a substantially larger yield.
Planning for retirement can be difficult for a lot of people. It's such a paramount stage of your life and there's an overwhelming amount of information that most people don't understand. If you're serious about planning, then you should consider reading up on as much information as you can. You may even want to talk to someone who has more experience like a financial planner. Whatever you do, be sure to take head of your investment options so that you are prepared when the time comes to retire.
Benjamin Miller is a prolific freelance writer who has published articles covering most all niches. Aside from writing, which is his chief passion, he also loves football and playing out in the park with his two kids.
Join the free Master Your Money course!
Join the free email course and finally learn how to manage your money better, pay off debt, save more money, and reach financial freedom.