Almost every investment idea sparks a debate in the financial industry. There are generally merits on both sides of the argument because no one will ever be able to definitively prove which investment will perform well in the future.
For those of us who are trying to gather enough assets to afford a comfortable retirement, it can sometimes be downright frustrating. Will commodities be a good investment going forward? Are REITs a good investment for the long-term? You can only do so much to avoid investment mistakes before you start looking for additional opportunities for growth. Here are five investment moves to consider that will make sense for many people, no matter what the market does.
Get an immediate annuity. Getting a guarantee that you will receive a check in the mail every single month is very comforting. An immediate annuity may not sound very appealing if you look into the numbers, but not having to worry about your money running out may provide a safety net that allows you to invest the rest of your assets more aggressively.
Bonds instead of bond funds. For the last couple of decades, investing in bond funds produced a good income as well as growth. However, with rates as low as they are, we may see continuous increases in interest rates for the next decade or longer. Rising rates will lower the value of the bond fund. However, holding on to individual bonds until maturity will always mean that you will get the principal plus interest as long as the bond issuers stay intact.
[See 10 Bargain Retirement Spots.]
Get more yield. Many stocks are offering attractive enough yields to warrant a look. However, it’s a good idea to be cautious when trying to chase yield. A strikingly high yield is not guaranteed to stay that way. A company can suddenly cut its dividend at any point.
Shift to index funds. When you buy an index fund, especially a broadly diversified fund that tracks the S&P 500, you are essentially betting on the long term prospects of the U.S. economy (and to a lesser extent, the global economy). Therefore, you are relying less on your equity picking skills, and more on the assumption that the world economy will continue to grow.
Hire a financial planner. There are many reasons to hire a financial planner. Chief among them is that a second opinion from a professional is always helpful. Additionally, your desire to manage your own investments may decrease as you age. Do you really want to stress about your retirement portfolio when you are 70 years old?
Not all of these investment ideas will be right for you. But give some serious consideration to these relatively safe investments, especially if you are approaching retirement. They may help you to sleep better at night.
David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.