Eight Investments That Prevent Baby Boomers From Having a Bad Retirement

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Retirement is hailed as a time when life becomes easier as you no longer work and after all, you can enjoy a freer life.

However, if you haven’t financially planned for your retirement, you may find that your dreams of an easier life feel more like a nightmare. It is even conceivable to fall into poverty because your expenses exceed the source of income you have established.

See also: Eight Ways Baby Boomers Are Getting Poor in Retirement Find out: Ways to Protect Your Retirement from the Recession

To ensure that you don’t find yourself poor in retirement, here are eight investment ideas that can keep baby boomers financially sound at this crucial stage of life.

For baby boomers already retired or nearing retirement, it is important to maintain a balanced investment strategy that includes equities, according to R.J. Weiss, CFP and CEO of the personal finance site The Ways to Wealth.

Equities are just another word for stocks, but it speaks more to the equity you hold in the company whose stocks you buy.

Weiss said, “Stocks, especially low-fee index funds, still play a role in ensuring the expansion of a retirement portfolio. »

While some experts suggest opting for more conservative investments as retirement approaches, Weiss suggests, “It’s not about excessively reducing equity exposure. They are offering the prospect of expansion needed to prevent their portfolio from stagnating. “

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Bonds have a promising long-term outlook, due to the recent rise in interest rates, Weiss pointed out.

“This is an advantageous time for baby boomers to add stability to their portfolios,” he said.

While short-term investments such as CDs or high-yield savings accounts may seem appealing due to their recent interest rate hikes, Weiss cautioned that rates can decrease as fast as they have increased.

“So it’s sensible to take advantage of high bond yields now,” he said, “rather than threatening to hold on to your investments in short-term products. “

Another form of bond is the convertible bond, which John Browning, a financial advisor and founder of Guardian Rock Wealth, calls “a hidden gem.”

He explained that these monetary tools offer the most productive of both worlds, whether it is a solid source of income and the possibility of capital appreciation. Imagine a bond that can be converted into stocks when the market is doing well. Look for corporations with convertible bonds in their portfolios, especially those in sectors with promising expansion clients, such as renewable energy or technology.

Others are closed-end municipal bond budgets, which Browning calls “the unicorns of global investing: rare but magical. “These budgets are traded on an exchange.

It’s a smart concept to buy them when they’re trading at a discount, Browning said, “so that you not only get a tax-advantaged revenue stream from municipal bonds, but also the potential for capital gains when the market corrects their prices. “”.

Another investment option is Treasury Inflation-Protected Securities (TIPS), a type of U. S. Treasury bond designed to hedge against inflation, Weiss explained.

“As inflation rises, so does the cost of TIPS, ensuring the purchasing power of your investment,” he said. “They offer a constant interest rate, but the principal adjusts for inflation, as measured through the customer value index. “

For example, Weiss said, if you invest $10,000 and inflation is 2%, your equity increases to $10,200 and you also earn interest on that new amount.

According to Jeff Rose, CFP and founder of Good Financial Cents, investing in corporations with a strong history of paying dividends is a wonderful strategy for baby boomers because they offer not only normal income, but also prospects for capital appreciation.

“For instance, well-established companies like Johnson & Johnson or Procter & Gamble have consistently paid and increased their dividends for decades,” Rose pointed out. “These stocks can be more stable than growth stocks and provide income even in volatile markets.”

Annuities, which are investments offered through insurance companies, can also be great tools for ensuring a stable source of income in retirement, Rose said.

“For example, a constant annuity may simply provide a guaranteed interest rate for a set period of time,” Rose explained. “Let’s say you purchase a $100,000 annuity with a 3% annual return. This would provide a solid, predictable income monthly, for a set number of years, or even for life.

These investments offer a reliable way to earn a stable stream of income, especially for those who need to outlive their savings.

A critical investment opportunity that few people are aware of is direct participation (DPP) systems, Browning said. DPPS is aimed at investors who invest cash in long-term projects.

“These are investment opportunities that allow you to participate directly in the money flow and tax benefits of the underlying assets, whether in real estate or energy projects,” Browning said. “Think of it as an exclusive behind-the-scenes pass to investment work. “

Real estate PLRs, for example, can offer consistent returns and tax benefits that would possibly give your portfolio the edge it needs, he said.

The most productive strategy is to take advantage of as many investment opportunities as possible as soon as possible to build the source of income you want to live a smart life in retirement. As always, you deserve to consult with a professional money advisor to discover the most productive technique for you.

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