The ability to take care of yourself or family members financially after retirement can be a reality by making smarter investments. While there are many markets that can produce a return on investment, there are more safe retirement investments options in 2015 compared with relying solely on the unpredictable swings in the stock market in the U.S.
The common approach used by many adults is to maximize mutual fund investments. This can be a rewarding strategy although nothing is guaranteed in a mutual fund and accounts do lose value. The following list provides an overview of what are safe and sound investing solutions for mid-career adults or those planning for a more comfortable retirement.
1. Investment Real Estate
When compared to the best stocks or bonds, returns on rental homes can be two to three times higher on average. Companies like Forbes, Bloomberg and the Wall Street Journal have highlighted stock market returns for investors between 2.3% and 7% annually. Why rental properties are so successful for many individual investors is the constant demand. Because people always need somewhere to live, rentals most always produce monthly cash returns.
A good investment home in a strong neighborhood should command between 8% and 15% each year. Someone who thinks that cash is the only investment option for a rental property would be mistaken. It is possible to use an IRA for real estate, 401K, 403b, Simple IRA and other similar investment accounts. The purchase price or the down payment can taken straight from qualified accounts to eliminate the need to use personal cash to grow a safe return on investment. Income held in an IRA does grow tax-free making the actual received returns higher than the national average.
2. Real Estate Investment Trusts
A person who avoids the stock market like the plague will likely appreciate what an REIT or real estate investment trust offers. Like a managed mutual fund, a trust is setup through a trustee to provide management of the fund. The difference is that the fund is used to purchase commercial properties, apartment buildings and other structures in the housing industry. The advantage to investors who diversify with an REIT includes a minimum of 90% payout of the fund each year.
A person who is not ready to invest fully in a rental real estate property could explore the option of an REIT. The liquid nature of the trust fund is lucrative to someone who needs to free up cash for an emergency or for another investment purchase. A downside to the real estate investment trust is that interest rates can affect the rate of return that is received annually. Taxation is different for each investor and rates could be higher for some people who own a portion of a trust.
3. Immediate Annuities
Like whole life insurance plans, annuities that offer fixed rates build wealth over many years. There are costs involved with buying an annuity that go towards a management fee. In exchange for this percentage, a guaranteed return is provided. There are plenty of providers of annuity-based products although it can be a good option to purchase long-term plan from a known insurance company.
A good method to use when choosing an annuity is to decide how many years of growth is needed in the fund compared to how many years income will be needed. For most people planning retirement, this could mean a period of at least 10 years. A drawback to some annuities is that some salesmen work off of commission and can cross promote products that do not fit into a long-term investing strategy. Common products include a single premium immediate annuity or a deferred income annuity.
Exploring the options to invest money to help create a better retirement is best completed as early as possible. JWB is one of the pioneers in turnkey real estate sales in the United States. A free PDF guide for beginners that highlights the easy pathway to owning a rental home is provided on this page. In exchange for an e-mail address and contact phone number, this helpful guide can be downloaded immediately using any Internet connection.