Money doesn’t grow on trees, but it can grow in the right investment. Choosing the right area to increase your investment can be a tricky venture. For safe retirement investing, you should allocate your assets in a variety of areas. Stocks, bonds, and short-term investments are all good areas for investing retirement funds.
The stock market has the reputation of being a scary speculation arena. This is often true for short term investments where losses and gains are more abrupt. For long term investments, however, the stock market is a good place for solid returns. Although the market can have sudden drops and falls, the big picture shows a steady climb over time.
If you worry about the insecurity of stocks, you may prefer to put your money into bonds, which are essentially loan investments. Bonds are generally assumed to be a little more stable than stocks and if you’re already close to retirement age, they can be a great, low-risk option. But like any investment, there are still some risks and if you have time on your side, you may see a better return with stocks.
The third option, and the most secure is short term investments such as savings and money market accounts. The money you put in is guaranteed to be there along with the interest you make off of it. These type of investments are better for short term, as inflation may eat away at any interest you make in the long term. Because of the lower risk, you’ll also see a lower interest rate so your return won’t be as attractive as it would be with other, higher-risk investments.
In order to create a stable retirement plan, you should divide your money between investment opportunities, often referred to as “diversifying your portfolio.” Deciding how best to allocate your assets will depend on how far off your retirement is and how willing you are to take chances. To create a worry-free retirement portfolio, focus on researching your options, diversifying your assets, reevaluating your choices, and reallocating as needed.
And of course, a good financial planner is always a must.
Paul A. Kraft, Estate Planning Attorney
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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