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Managing Your Money: 9 of the Best Investments for Retirees


If you’re transitioning from a career to full-time retirement, it’s time to enjoy the “fruits of your labor.” But that doesn’t mean you have to stop saving and investing.

People are living longer than ever. Your nest egg may need to stretch for decades to come.

There are many ways you can invest without risking your life’s savings. As a retiree, you may want to shift your investments from volatile growth to more stable returns.

The goal is to choose the right investments that can generate a decent return without taking on unnecessary risk. Take a look at this guide for 9 of the best investments for retirees.

1. U.S. Treasury Bonds

U.S. Treasury bonds ensure long-term security and pay semi-annual interest increments. The interest on these bonds is exempt from state and local taxes.

You must set aside a portion of the interest for federal taxes, however. Treasury bonds come in 30-year increments.

They continue to earn investments until maturity. Once the bond matures, you receive back the amount you paid in principal.

Most brokerage firms offer treasury securities. When you purchase these, you can add them to an IRA or 401(k) if you choose.

2. U.S. Treasury Inflation-Protected Securities

The government offers treasury inflation-protected securities (TIPS) as a vehicle for treasury debt. Unlike bonds, treasury securities pay interest and additional principal to compensate for economic inflation rates.

TIPS are a safe investment for retirees. However, the low-risk rate means TIPS have lower interest rates than other securities or stock options.

3. Immediate Annuities

Immediate annuities offer guaranteed income immediately. They are a form of insurance that provides a steady stream of income.

These annuities appeal to retirees because they payout right away. They may be for you if you have difficulty sticking to an investment plan or live on Social Security.

Immediate annuities aren’t for everyone though. They tie up your assets, and you can lose money if you die before “cashing out” the annuity.

4. Real Estate Rentals

Renting out properties can generate a steady income, but it requires a hands-on approach. Before you become a landlord, think about the considerable work involved.

You will deal with maintenance, negligent renters, and more. You must also consider times with vacant property and how that will affect your income.

No property will be occupied 100% of the time. If your income won’t allow for downtime, rentals aren’t a good investment choice for you.

If you have a real estate background or time to spare, rentals can be a solid investment opportunity. Real estate can provide a steady stream of income, but make sure you understand the risks before buying.

5. Real Estate Investment Trust

A Real Estate Investment Trust (REIT) is a mutual fund that combines your real estate holdings. This could include commercial buildings, apartments, vacation properties, etc.

You pay a fee for someone to manage the properties, pay expenses, and collect rent. You receive the remaining income after expenses.

If you want to own property without the day-to-day responsibilities of the job, a REIT may be a good investment choice.

Before making any investments, you should do your research. Financial professionals like those at TruNorth Advisors can help you find the right investment for your retirement needs.

6. Target Retirement Mutual Funds

Target retirement funds are mutual funds that allow you to invest your money in diversified assets. These assets are set up to help you retire by a date you’ve chosen.

These retirement funds may be a good choice if you have a few years until you retire. It’s a way to protect your savings as you head towards retirement.

Look for a target retirement fund that matches the year you hope to retire.

7. High-Dividend Stocks

Investing in high-dividend stocks provide retirees with short-term income. You can sell your stocks if the income stream dwindles.

The dividend may vary depending on the industry you choose to invest in. Generally, any dividend over 4% is a good choice.

Utilities, telecommunication, and business development companies are subsets of the stock market that typically see higher dividends. However, all stocks carry a risk due to the potential of a market downturn.

Investing a portion of your portfolio in high-dividend stocks can provide you with continuous income and capital appreciation, which may help you weather times of inflation.

8. Peer-to-Peer Lending

Peer-to-Peer Lending (P2P) has been growing in popularity over the last 15 years. P2P takes place online and matches investors and borrowers in mutually beneficial loans.

It’s a loan process that doesn’t involve a bank as an intermediary. Many P2P investments pay out higher interest rates than stock market investments.

The risks and the rewards vary based on who you lend to and whether they follow through on repayment.

9. Dividend Income Funds

A dividend income fund is a collection of various stocks that a fund manager oversees. You receive dividends due to the underlying stocks in the fund.

These dividends can rise and fall with passing years. Many publicly-traded companies generate dividends that are taxed at lower rates than other sources of income.

For this reason, it makes sense to hold qualified dividends in non-retirement accounts. Be wary of dividend income funds that promise high yields.

Funds with higher than average yields come with higher than average risks.

Best Investments for Retirees

Retirement is a wonderful stage of life, but it doesn’t mean you have to stop saving or investing. Whether you are approaching retirement or are already enjoying your golden years, you can still make the most of your investment dollars.

You want your retirement years to be comfortable and your nest egg to last you many years. And there are so many investment opportunities to choose from.

Talk to a financial professional to make sure you are choosing the best investments for retirees. They can help you determine the right investment options for your retirement needs.

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