It’s never too late to invest. Even if you’re in your golden years, you can still make your money work for you to some degree.
Just follow the pointers below.
- Assess the risks before investing
Before investing in stocks, funds and other securities, do your homework and find out how risky the investment is. Generally, seniors have low risk tolerance because they don’t have the time to recoup their losses.
Find out the fees associated with the investment too. The goal is to make money while reducing the costs involved.
- Rebalance your portfolio
You’ll always want to keep the winners and discard some of the losing investments. The key here is to find the balance.
For example, if you have airline and railroad stocks in a 50/50 ratio, but because of the Covid pandemic, your airline stocks are plummeting in value, you’ll want to replace the airline stocks with railroad stocks which seem to be rising.
So now, the ratio of the airline stocks to railroad stocks you own may be 40/60 or even 30/70.
Rebalancing your investments will keep you on track. Do be aware of taxes that may be owed from trades that result in profit.
- Invest in bonds
For seniors who are risk-averse, investing in bonds is a relatively safe option. While there is a small degree of default risk associated with bonds, they’re generally safe and your principal and profits are more or less guaranteed upon maturity.
Always make sure that the interest rate on the bond exceeds the current rate of inflation. Or your returns will be wiped out.
- Invest in yourself
Nothing guarantees a greater rate of return than investing in yourself. One of the best ways to do that will be to learn new ways to generate an income. Most seniors may dislike stepping outside their comfort zone to learn something new.
However, the internet has opened opportunities to millions of people and many seniors are making good money online. Invest in your own online marketing knowledge and apply what you learn.
You’ll be able to make far more profits online with affiliate marketing or ecommerce than what most stocks and mutual funds will pay you. Just ensure that you’re not splurging on ‘get rich quick’ schemes.
Instead focus on learning from YouTube and with Google. You’ll be amazed at how much you can learn… and then earn. And after a while, you’ll be able to make money relatively passively.
It’s far easier to work online than at a real job. You’ll be your own boss and can take a nap anytime you want… and even earn profits while you sleep. It’s a win-win.
- Invest in annuities
An annuity is both a type of investment that’s also a form of insurance. This long-term investment is often offered by insurance. If you’re close to retirement, you may deposit funds into a lifetime income annuity.
When you do this, you’ll be annuitized and can receive periodic payments monthly for life. This is one of the safest investments because your principal is guaranteed.
The only downside is that annuities have poor liquidity. However, since most retirees prefer a stable income stream coming in rather than constantly switching investments to get the best rewards, this is a good investment.
At the end of the day, when investing your money, you’ll want to assess your risk tolerance and invest cautiously. Always seek to guard your principal from risk.
Certificates of deposits (CDs) have low interest rates as compared to bonds, etc. but they’re much safer.
Only you can decide what is right for you. You may wish to speak to a qualified financial advisor for more advice… but use the info you get to make your own decisions instead of following their tips blindly.
Investing during retirement is possible and if done right, can help increase the size of your nest egg.