Retirement means the end of working and the end of earning a paycheck from an employer. Many retirees look into investing after they retire to keep their cash flow growing. The biggest challenge these days when it comes to retirement is outliving your retirement funds. With increased life expectancy, many are worrying they will outlive their savings. Investing after you retire helps you to avoid these challenges and supplements your Social Security benefits. Keep reading for five investments ideas after you retire!
Idea #1: Starting a business
One of the best sources of income and investment is owning your own business. Owning a business means that you will be able to make money on your terms. A business is your own investment. You determine how much you make and how much you want to make.
With so much time in retirement, you can begin a business that you’ve always thought of. Perhaps you’ve always wanted to sell organic dog treats and decide now you have so much free time that you can do it. That small business could bring in a significant amount of revenue for you, and now you have a new investment in your hands.
Idea #2: Dividend-paying stocks
A dividend-paying stock is when a company pays out regular dividends. They are typical with well-established companies that have a good track record of distributing earnings to their shareholders. The dividends you receive are higher than the safer investments like U.S. Treasury notes and CDs.
These stocks are known to keep you safe from inflation because of the combination of growth and income. If you have some free time in retirement to learn dividend-paying stocks, this is a very lucrative stock to get into.
Idea #3: Real Estate Investment Trusts
A Real Estate Investment Trust (REIT) invests in mortgages or direct equity in different types of properties. They distribute 90% of taxable income to the investors as dividends. High dividends and developing properties or selling them means investment money for you. REITs are an excellent investment for retirees to add into their portfolio. You might’ve heard before retirement that having a diverse portfolio is good, the same goes for investing after retirement.
Idea #4: Annuities
Annuities are an investment contract that is between an insurance company and you. They typically include a guaranteed return at a stated rate. There are different types of annuities; there are immediate, fixed indexed, and deferred. Fixed guarantees the principal invested. When you decide on an annuity, pay attention to any fees and commissions the annuity will charge. Annuities are suitable for retirees to invest in and expand their portfolios with a guaranteed return offer.
Idea #5: Preferred Stock
A Preferred Stock is a class of ownership with a higher claim of assets and earnings than a common stock. Preferred stock allows the holder to receive dividends equal to the specified rate that preferred dividends are paid to preferred shareholders. If a company stays healthy, that means a bigger payout to holders. High yields that preferred stock offers are desirable asset classes for retirees seeking a source of passive income.
As with the rest of the listed ideas, adding preferred stock into your diversified portfolio is a good idea. Relying on just one source of investment may make you unsatisfied. However, a diversified portfolio brings many different angles.
Overall, there are many excellent investment opportunities for retirees. You don’t have to be an investment expert to get involved in the ideas listed above. You need to do a little research and determine which investment idea sounds most appealing to you. Investing in multiple different strings of stocks, trusts, annuities, or cash flows gives you the ability to have a diversified, profitable portfolio.