Retirement Investing Info
Retirement investing typically involves a long term strategy that includes a number of investments to generate an income post-retirement. There is no single investment opportunity that offers the greatest return. Since every individual has personal requirements for retirement, the information here is merely designed to highlight the more popular and common options for retirement investment.
Retirement Investment through Immediate Annuities
An immediate annuity is designed to be a guaranteed income, with the individual guarantee standing as strong as the insurance provider who issues the IA. When an investor signs up for an immediate annuity, they agree to pay a lump sum payment up front. The insurance company then agrees to pay a monthly income to the investor as long as they are alive. If the investor passes before the lump payment is paid back then the insurance company retains the money. Should the investor go on to live a long and fruitful life then the company continues to pay – sometimes paying out more than what the investor has paid in.
Retirement Investment – Retirement Income Funds
Retirement income funds are designed to resemble a total return portfolio in an easy to manage system. This investment allows you to automatically allocate money across a diverse portfolio of stocks and bond funds. As the investor you are then given a monthly income. However, unlike the immediate annuity, you retain control over your principal and have full disclosure and access to your funds. Note that if you withdraw from your principle then monthly income will drop.
Retirement Investment – Bonds
Purchasing bonds is another investment option where you purchase a bond that is essentially a loan to the government or a corporation. The borrower then agrees to pay you interest on your investment for an agreed upon amount of time that is set at the purchase of the bond. Once the bond matures, the principle is returned to you. Interest paid on bonds or bond funds are often supplemental incomes for retirees.
Retirement Investment – Investment Property
Like any investment opportunity, real estate investment for retirement has pros and cons. While it can provide a monthly income source that is stable with good tenants, many homeowners inevitably incur unanticipated expenses due to maintenance requirements.
Retirement Investment – Closed-End Funds
Most closed end funds are designed to produce an income, be it monthly or quarterly. That income is generated from interest, dividends, and covered calls or in some cases a return of the principal. Objectives can vary as some own stocks, bonds, and some write covered calls in order to generate income while others use a dividend capture strategy. When combined with other investments in a retirement portfolio they can be an effective vehicle for generating income.
Retirement Investment – Real Estate Investment Trusts
A real estate investment trust (REIT) is similar to a mutual fund that deals specifically in real estate. The fund will manage real estate property, handle expenses, collect and process rental fees, take a cut for management expenses and distribute the remaining income to the investors.
There is no shortage of investment opportunities for those planning their retirement. From Safe Investments to Divided Income Funds, any individual looking to invest in their retirement and future has numerous options to build out a portfolio and generate a comfortable monthly income.
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