Retirement Investing

A Basic Primer On Retirement Investing Strategies

Retirement investing strategies are diverse and varied. In general, investing for retirement is considered a long term approach. This is distinctly separate from trading or short term investing where the individual buy and sells shares on a regular basis. However, some investors who are more active employ a combination of both long term and short term trading styles. Because there are many different trading vehicles and styles, the focus of this article is on longer term retirement investment strategies.

Mutual Fund Investing: This is where a portion of retirement savings are regularly invested in managed mutual funds. The funds are managed according to sector and style mandates. There are entry, exit and annual fees payable to the mutual fund for this service. The stock selection and management is conducted by qualified professionals who manage a portfolio of stocks on behalf of individuals who invest in the fund. These funds are popular in America.

Managed Fund: Managed funds are similar to mutual fund investing. These funds have specialist investment approaches. Some are income oriented and invest in dividend paying stocks whilst others are growth oriented and select stocks that are primed for capital growth. These funds have minimum capital access requirements.

Real Estate Investing: Real estate investment strategies for retirement focus on accumulating property for capital gain and rent cash flow. This form of investing often has tax advantages. Initially, real estate investing may require loan servicing from savings or income above the amount covered by the rent. Over time, capital and rent growth is an effective wealth accumulation strategy. There are many worldwide documented cases of successful property investors who have reached retirement at an early age or used property as an effective retirement vehicle.

401K Retirement Plans: Deferred savings plans established by employees or employers are an effective retirement investment strategy. Money contributed prior to tax can allow an individual to accumulate a nest egg and offset tax. In the case of employer sponsored plans, this can accelerate savings and be used very effectively to accumulate cash reserves that can be used in retirement or borrowed against in emergency situations.

The above examples are some common retirement investing strategies. More sophisticated structures and strategies are employed by individuals who self manage their retirement savings. In practice, a combination of the above may be employed as part of a diversified portfolio. A financial planner can help recommend individually tailored solutions that suit your individual requirements.

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