Retiring? 5 Smart Investments You Should Be Making in Your Retirement
Monday, March 27, 2017, 6:00 PM | Leave Comment
When it comes time for retirement, you will need to make decisions that will impact your cash flow positively during your non-working (or reduced working) years.
In this article, we will discuss five smart investments that you should make during your retirement to help in this process.
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Consider Your Location of Residence as an Investment
As Robert Kiyasaki points out in his book “Rich Dad, Poor Dad”, a home itself is not an investment.
A home requires expenses that take money out of your pocket, not incomes that put money into your pocket.
However, you still want to put your final home in a place that has a good chance for appreciation.
For example, there are groups like Sea Pines Real Estate – The Cottage Group that can help you find great homes that have growth potential in retirement areas like Hilton Head, SC.
Since Hilton Head would be a wonderful place to retire AND it has location growth potential, this would make your final home a good investment.
Naturally, there are plenty of other home locations that provide growth potential as well!
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Real Estate Investments
Besides using your home as a type of investment during retirement, make sure that you continue to invest in real estate properties as a retiree if you have the funds to do so.
Besides having incredible tax benefits, real estate investments can provide you with great monthly cash flow that you can use to pay your regularly occurring expenses during retirement.
All this requires is that you find a good property manager that you trust and make wise property investment decisions.
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Reduce Your Stock Exposure
As you get older, it is prudent to continually reduce your stock exposure and convert more of your investment funds into bonds.
Since stocks are so cyclical in nature, it is possible that we could hit a severe market downturn where you would be forced to sell stocks cheaply in order to pay for large medical expenses or even your regular expenses.
With bonds, we mitigate this risk by creating safer income.
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Consider Dividend Growth Stocks
Another way that we can mitigate stock market risk is by transferring regular common stock money into companies that we consider “Dividend Growth Companies”.
These are corporations that have a history of more than 10 years for increasing their dividend payout ratio each year.
By investing in these companies, we ensure a fairly good probability for protection of principal and an increasing dividend payouts for income.
There are even a couple of monthly dividend companies that can really help to spur your monthly income.
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Consider CD Ladders
In the past eight years, CDs have really been horrible investments due to the low interest rate environment that we have been in.
However, with the Fed raising interest rates on March 15th and projecting three rate increases a year for the next three years, now may be the time to begin looking at CDs realistically again.
Construct CD “ladders” so that unused funds are invested into CDs and mature at different lengths, so that you may access funds when needed or otherwise reinvest those funds if they are still unneeded.
Keep Your Principal Safe and Keep the Cash flow Growing
Retirement doesn’t have to be a time when your money supply dwindles endlessly.
If you take the right steps, including those listed above, and manage your money well, you can keep your principal safe while also simultaneously growing your cash flow–even in retirement!
As always, consult your financial advisor before making any investment decisions!
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