Every individual wants to keep their nest eggs safe. There are 5 rules which need to be followed to find safe investments and see whether they fit into your retirement income plan. All 5 rules for a safe retirement investment are mentioned below.
- See what investments are safe: In the real world, no investments are totally safe, but there are 5 investments which are considered to be safe retirement investments, like bank savings, money market accounts, CDs, treasury securities and fixed annuities. These safe investments’ primary purpose is protecting your principal amount. The secondary purpose of buying such investments is to provide income via interest.
- Learn how safe your investments are: All safe retirement investments have risks associated with them, and none are completely safe. There are three types of primary risks, such as loss of purchasing power because of inflation, the potential for losing principal, and the risk that comes along with liquidity.
- Figure out how your money can be safe: Before investing in any safe retirement investment, it is important to keep at least 3-6 months’ worth of living expenses in your bank account, in case your investment fails to reap any returns. You should always keep emergency funds available. The closer you are to retirement, the more secure and less risky investments you need to invest in.
- Consider realistic rates of return: How much investment incomes and what kind of investment returns you can expect to receive from safe retirement investments depend upon the year. With the current interest rates, you should not expect higher returns from safe investment choices. You need to add some more choices for a higher return.
- Add choices which offer guaranteed returns: Finding investments which offer a guaranteed return falls under the category of safe investments. It all depends on where you’re receiving the guaranteed returns from.
These safe retirement investment choices provide a great foundation for a safe and secure retirement income plan.