Retirement Investing

Choosing Retirement Stocks For Retirement Planning, Income And Capital Growth

Planning for retirement requires asset allocation and risk management. Both of these aspects change over time depending on the portfolios owners objectives and stage in life. Building a portfolio of retirement stocks is one component of wealth management. Choosing the right combination of growth and income producing stocks depends on whether the goal is capital growth, income production or a combination of both.

In the early stages of retirement planning, individuals can focus their attention more on capital growth. This involves choosing stocks for retirement that have the greatest potential for capital gain. These stocks may be more risk adverse than other stocks. Fluctuations in the early stage of retirement are manageable because it is thought that a higher return will ultimately result despite the short term fluctuations. High growth stocks should be considered as part of any individuals stock retirement plan.

Income producing stocks are stocks that pay higher rates of dividend. They may also enjoy capital growth but are primarily selected because the return from holding them is likely to exceed the rates earned by bank deposits. Income producing retirement stocks take on greater significance during the actual retirement transition. As individuals move into retirement, they may alter their portfolio objectives from growth to income producing and protection. A portfolio of retirement stocks that pay high dividends can provide the cash flow to sustain a high quality of retirement life. Traditionally, these stocks are more conservative than growth oriented stocks. They are likely to be mature stocks in relatively stable industries that consistently pay dividends year after year.

Exchange traded funds are a relatively new addition to the stock market that combines both capital growth and dividend payment. These stocks are sometimes based on a basket of stocks, weighted internationally or on the basis of an individual country. This can allow investor's exposure to international companies that have the potential to produce high growth and income at the same time. Some of these funds are based in high growth economies such as the emerging markets of China, India and Brazil . They are for more sophisticated investors and are generally considered more risky. They can be used effectively for retirement planning.

To learn more about stocks and retirement, you can purchase books on different investing approaches. The 'canslim' method of stock selection by William O'Neil is a high growth oriented approach that has produced significant returns for individuals that have taken the time to diligently learn and apply the methods. You can purchase the book 'How to make money in stocks' for more detail on the methodology. You can use this method to formulate a stock retirement plan.

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