Saving and investing for retirement is one of the most important financial goals that exists. Without the proper benefits upon retirement, an employee may have to work longer than anticipated and that might have been necessary with the proper investments. Investors may need to be willing to invest in assets that have some risk and can be volatile to earn the desired returns. Conservative investments should be used to add safety to a retirement fund.
Government bonds are among the most secure investments that can be included in a retirement portfolio. Investment grade corporate bonds are similarly safe. The risk of a default on both types is low. Investors receive ongoing interest payments until a bond expires, at which time the principal amount of the investment is returned. A high-yield bond delivers greater returns, but there is a higher risk of default. Coupling these types together could yield the best results.
Stocks can be a volatile investment that produce severe market swings both upwards and downwards. Despite the possibility of loss, a potential for profits is also great. Incorporate safety into a retirement portfolio by investing in dividend-paying stocks. Even if stock performance falters, there is a possibility that the decline is based on events that are not company specific but instead misdirected investor fear. If company profits remain solid, the stock may continue to pay dividends, which are discretionary quarterly or yearly payouts.
According to The Motley Fool, mutual funds are the best way to invest for retirement. Mutual funds are professionally managed investment vehicles with pooled assets from multiple investors. Investors gain access to more diversification, that is different asset classes or categories of investment, in addition to greater global exposure than would be possible by selecting and buying individual stocks. Diversification is a tool that can protect a retirement portfolio against severe losses in any one stock or bond investment.
Just because an investment has been a high-yielding performer in the past does not mean that it will replicate that performance forever. According to FT Adviser, in 2011, high-yield bonds were becoming more of a mainstream asset class in Europe alongside stocks and traditional bonds. Investors were intrigued by double-digit returns that were delivered in previous years. Although growth in high-yield bonds was still expected, the asset class was not expected to perform as before. Investors nearing retirement should have realistic expectations.
- Photo Credit Jupiterimages/Comstock/Getty Images
Where Can I Get the Highest Interest on My Money?
Interest rates can help account holders boost money held in savings for a long period of time. Finding the best interest rate...
What Are High Yielding Dividend Stocks?
Investing in dividend-paying stocks is one of the safest strategies for playing the stock market over the long term. A dividend is...
How to Find The Best High Yield Safe Investments
A lot of people today have been stung by the current financial conditions, whether in stocks or otherwise. And, as a result,...
What Is the Safest Bet for a Retirement Investment?
People typically want to make money, and most people want to make money while assuming as little risk as possible. The loss...
The Best High-Yield Short-Term Investments
With savings accounts and money markets hardly paying any interest, you may want to look for alternative forms of high-yielding investments to...
What Does "Retirement of Bond" Mean?
Companies often issue bonds to secure financing for business operations. Bonds are long-term debt under basic accounting principles. Like many other accounting...
The Best Dividend-Paying Stocks
As of July 2014, there were over 600 companies with market values greater than $500 million and a yield above 3.5 percent...
Safest Investments With Best Rate of Return
No investment is completely risk-free, though some are certainly safer than others. When looking at the risk/return ratio in investing, the general...