Are you nearing retirement age? If you are, you might have already started stressing over retirement investment plans, which is fine. But you shouldn’t stress out too much. Your retirement can be safe and secure if you play your cards right. This blog post by Fred Auzenne will look at some low-risk, high-reward investments for your retirement, so stay tuned.
Fred Auzenne’s Top Picks for the Best Investments for Retirees
Unlike stocks, bonds are less risky. However, they are always susceptible to fluctuating interest rates. When interest rates spike, so do the bond yields, which decreases the prices of bonds.
This phenomenon applies specifically to long-duration bonds. Luckily, this risk can be dealt with through a process called bond laddering.
In bond laddering, you buy bonds from different maturities. As a result, when a bond reaches maturity, the investor redeems it for its face value.
As a result, the investor isn’t forced to sell the bond earlier on at a loss. Bond laddering offers a better cash flow, which is important for a retired individual.
Certificates of Deposit
A financial institution sells this savings product. It guarantees a principal, including a fixed annual interest rate.
When you get a certificate of deposit, you can choose a lock-up rate. However, during the duration of your investment, you cannot redeem it.
During this period, you will continue to receive your interest rate. However, at maturity, you will receive your initial investment back.
By building a ladder of CDs, retired people can ensure cash flow, which helps them lead a comfortable life without any financial worries.
Low Volatility Stocks
It is known that the expected future return on a stock depends on market risk. However, this rule doesn’t apply to low-volatility stocks.
These stocks have lesser sensitivity to the movement of the wider market. According to Fred Auzenne’s research, low-volatility stocks have outperformed the market in the past.
These stocks help investors lessen the risk of their stock allocation without minimizing their expected returns.
Preferred stock is something retirees can invest in. It combines the characteristics of fixed income and equity. Unlike other regular equities, preferred stocks have access to a business’s assets.
In the event of liquidation or bankruptcy, the investor won’t have to worry. However, they can’t retain any voting rights. Luckily, in an exchange, a preferred stock always pays a higher dividend.
The best thing about preferred stocks is the predictability of cash flow. According to Fred Auzenne, they have a lower risk than other options in the market, which makes them safe for you if you’re nearing your retirement.
Fred Auzenne’s Final Words
These were just some of the many retirement investment options by Fred Auzenne. As effective as they are, it doesn’t mean they will work for everyone the same way. Your job is to be creative and look around to explore some of your options. You can also work with a professional financial advisor to figure out where you must invest and where you shouldn’t.