Investing Your Retirement Money Smartly

Like most Americans, you’ve probably thought about investing retirement money to make the most out of what you have. Investing poorly with a retirement fund can lead to dire consequences though. The last thing you want is to lose your money before you even get a chance to retire, especially in today’s economic climate. Here are a few things to keep in mind to avoid a potential nightmare later.

Risk Factors

Unless you are very young and just beginning your retirement investments, you should be investing in pretty conservative accounts. If you invest aggressively and are only a few years away from retirement, the risk is very high. If you are under 30 you can get away with more aggressive investment plans for a little while. But by the time you reach 45 your investments should be stable and non-aggressive.

Diversity Pays

Having a portfolio with many different types of investments is just a smart thing to do regardless of your age. Having a combination of small caps, international stocks, a few bonds, and some large caps will assure that if one investment starts to fail you still have others to rely on. It can also work to your advantage if one area starts to do very well for a short period of time. The best portfolio is one that is very diverse.

Don’t Overload on Company Stock

For many people it can be very tempting to have a large chunk of their retirement investment tied up in their own companies stock. This can be even more tempting if you work for a company that has enjoyed sky rocketing stock at some point. This can be dangerous though, and it’s certainly not smart. It’s ok to invest some money in your companies stock, but don’t overdo it. Just ask an ex-employee of Enron how this worked for them.

Take Time to Do the Math

Take a look at your current expenses and you can get a good estimate of how much you will need in to retirement. Health care expenses may increase, and some expenses can be eliminated all together at the point of retirement. If you are realistic about what your needs will be, you will be better equipped to figure out how much needs to go in to your retirement accounts, and how to best invest it.

Ask for Professional Help

Asking for help is never a bad thing. A skilled financial planner can help you understand the ins and outs of a solid retirement investment portfolio. Many times your employer can offer these services to you at a discount through your benefits packages. Check in to this, it can be a great asset. If your employer doesn’t offer these services, your local bank may. Whatever route you choose a professional can help increase the amount of money you get in returns on your investments.

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