With so much volatility, it is difficult to invest your hard-earned money in the stock market. People always look for a safer and more secure investment when they come closer to retirement. It is a risk if you keep all your money in the bank. Thus, it is important to look over all the investment plans available as per your risk profile. The top 5 retirement investment strategies which can be applied are as follows:
- Balanced funds: A balanced fund is a type of mutual fund which is a good option for a conservative investor. This is a mix of stocks and bonds for safeguarding your money. In spite of any short term volatility investments, stocks have an expected return which is higher than the inflation rate, making this one of the most effective retirement investment strategies.
- Bonds serve as a stabilizer: Bonds play a vital role in any conservative investment portfolio which are tailored for the retirees. The high quality bonds such as highly rated bonds or treasury bonds, bond funds or individual funds are too risky, so it is not recommended to invest in such bonds. Multi sector bond funds which invest in a variety of bonds can be a good option.
- Diversify: This is the most common retirement investment strategy. Diversifying your money with the help of real estate investment trusts can generate a lot of income after your retirement. These real estate investment trusts pay out around 90% of their income in the form of dividends.
- Dividends: The stocks paying dividends are helpful because recurring cash flows are really important today for investors. These can provide a stable and steady income which has the potential to grow as well.
- Immediate Annuities: Individuals wanting a guaranteed return or income payout can consider annuities as an effective retirement investment strategy. Instead of taking a lump-sum of money, you can ask for the money on an annuity basis which will provide monthly income until the time of your death.
There are many investment resources available online that you can go through to get a better understanding of these strategies.