Continuing to Invest Through Your Retirement

Retirement is a game changer when it comes to investing, as you will need a completely different investment strategy than you had when you were building your nest egg. Why is this? Well, most people can?t afford to take risks with their retirement money, because once the money is gone, it?s gone.

Where you were once willing to take risks with your money with the hopes of seeing huge capital gains, retirement forces you to minimise any risky investing moves so that you can maintain a meaningful level of income and avoid running out of money too early. Since there are endless options when it comes to retirement investing, the following tips will help you choose which strategy is best for you.

Immediate annuities

The major risk retirees face is the possibility they will outlive their money, and an immediate annuity is perhaps the simplest way to ensure this doesn?t happen. Immediate annuities offer an investment option that provides guaranteed income, whereby an insurance company must pay regular income over the lifetime of the policyholder.

Essentially, you pay an insurance company a lump sum and the insurer agrees to pay you a monthly income for as long as you live. If you die earlier than expected, the insurance company gets to keep the money, but if you continue to lead a long and healthy life, the company must keep paying you even if it?s substantially more than you paid initially.

Real estate investing

Property always has been and always will be a great way to diversify your portfolio, and it can benefit you in many different ways. For instance, if you have an investment property you are currently renting out, you will receive monthly income from the rents. When you eventually choose to sell your investment property, you will benefit from not being charged capital gains tax on the sale simply because you?re retired. Alternatively, you can invest in Real Estate Investment Trusts (REITs), which is like a mutual fund that owns real estate.

Fixed income investments

Fixed income investments cover a lot of different types of investments, such as bank certificates of deposit, individual bonds and unit investment trusts. The key characteristic of this group of investments is that the initial and renewal interest rates are fixed by the issuer over a certain period of time. This means you will receive interest income that will be steady and safe, with at least some measure of principle protection.

Asset allocation alternatives

This is by far the largest category of investment alternatives, as asset allocation strategies can range from single-product mutual fund purchases to individually tailored investment allocations that are provided by a professional. This type of investing provides a potential for higher gains and higher withdrawals during your retirement, but it comes with a slightly higher risk.

The benefit of this investment strategy is essentially to diversify your investment portfolio, as it includes investments such as brokerage accounts, mutual fund programs, deferred variable annuities, exchange traded funds and target and lifestyle mutual funds.

Investing throughout retirement is tricky business, as you don?t know how long you need your money to last and you only have a certain amount to work with. If you?re not sure of the best investment solution for your particular situation, you should always consult with a financial planner who can help you invest your money properly.

Source: http://blog.dpn.com.au/continuing-invest-retirement/

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