Jo Why Lee

London - United Kingdom

    Top 5 Retirement Investments

    July 1, 2014

    retirement investment

    When you are looking for ways to invest your money for retirement, you’re probably looking for investments that will provide you with some kind of income throughout your golden years. There are a number of options available in the financial market but not all are created equal and not all are suitable for everyone. You may want to shop around look online and compare annuitys and talk to a financial advisor for specific details on retirement investments if the options are too confusing or overwhelming.

    Immediate Annuities

    This type of retirement investment guarantees you with income for life. First, you pick an insurance company to work with and pay them a lump sum of money. In return, the insurer agrees to pay you a monthly income for life. If you outlive your annuity, the insurance company has to keep paying out your monthly income as per your agreement. If there is still money left in your annuity when you pass, however, the insurance company keeps the remaining balance. Since this is guaranteed income with no additional risk, it is one of the more popular retirement investments.

    Variable Annuities with Riders

    Variable annuities are different than immediate annuities. Instead of paying a lump sum to an insurance company, you put your money into a portfolio of investments of your choosing. The insurance company will then put riders on the portfolio. Riders are guarantees that the company provides for a fee. One of the better choices of riders is a lifetime income rider. This guarantee pays you a monthly income for life.

    Total Return Portfolios

    If you prefer to invest in stocks and bonds in the financial market, you can choose to create a total return portfolio. In this option, you can create your own portfolio with your choice of stocks and bonds. If you don’t know much about the stock market, you may want to meet with a financial advisor who can help you decide what stocks or bonds are best for your individual needs. If this portfolio is designed correctly, it can provide you with a respectable long-term rate of return that will provide you with steady income. With a total return portfolio, you must follow withdrawal rules to take out your money. The usual rule is that you can take out between four and seven percent a year but this may fluctuate with the economic times and may increase in times of inflation.

    Retirement Income Funds

    This investment option is similar to a total return portfolio and is a great option for income-generating investments. This fund allocates your money across a varied portfolio of stocks and bonds. You receive a monthly income, like with an immediate annuity, but you control the principle. You can also access your money at any time. This is ideal for emergency expenses that may come up unexpectedly. If you do take out extra money from your principal, your monthly income will go down.

    Investment Properties and REITs

    Investment or rental properties will generate a good amount of income but there are unexpected expenses like maintenance costs that can hurt your income. It also takes planning and work to keep up your investment and manage the property. With Real Estate Investment Tools (REITs), you can pay a manager to take care of your investment property for you. This manager, for a fee, will collect rent, pay expenses, and manage the overall property. You will then get the remaining money as your income. There is always a risk with investment properties, but if you know what you’re doing you can create a steady source of income in your retirement. 

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