Retirement Income Investment: 3 Tips to Investing Post-Retirement

The subject of retirement income investment is one that many investors know little about. Many people understand the basics of what they should do in order to get to retirement but do not know how to invest once they get there. Here are a few tips to investing successfully after you reach retirement.

1. Avoid Growth Stocks

In order to get to retirement, there is a good chance that you invested in growth stocks. These stocks put an emphasis on capital appreciation and, therefore, came with some risk. Sometimes they would have huge gains, and other times they would have losses. When you are still young and have plenty of time before you reach retirement, there is nothing wrong with this type of investment. However, once you reach the age retirement, you should probably stay away from these. Investing in these stocks could potentially contribute to losing your retirement money. Therefore, most of these stocks are a little too risky for those already retired.

2. Dividend Stocks

Although growth stocks are not your best bet, you should consider investing in dividend stocks. You will be investing in companies that pay a regular dividend to their shareholders. This can create a regular source of retirement income for you. These stocks do not put an emphasis on capital appreciation, but instead focus on sharing the profits with their investors. Many of these companies will distribute a dividend on a quarterly basis. However, there are certain companies out there that will pay a monthly dividend. These companies are typically holding companies that have many different sources of income to provide these dividends. When dealing with dividends, you need to be aware that you will have to pay taxes on them at your regular marginal tax rate.

3. Bonds

As a retiree, you will definitely want to consider investing in bonds. A bond can provide you with a regular source of income during your retirement years. When you purchase a bond, you are essentially lending money to a corporation or the government. The bond issuer will then make regular interest payments to you at a set rate of return. They will continue to make these regular interest payments to you over the life of the bond. At the end of the bond term, you will be able to receive your initial investment back.

Investing in bonds can be a very safe form of investment. Bonds are rated by financial companies such as MorningStar in order to provide you with an idea of how risky they are. You can choose to invest in only the best companies if you desire. This will provide you with very little risk and a steady source of retirement income. Bonds are not subject to risk unless the company that issues them goes out of business. Even then, you may be able to get your investment back because you are a creditor to the company.

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