A retirement investment is an investment or a commodity used to go towards your retirement plan. A retirement investment can come in many forms including, property, IRA’s, index funds, and stocks. When making a retirement investment, keep your age and retirement goals in mind. The younger you are when you start investing the more risk you can take with your investment choices. It makes sense for you to be more conservative with your investments the closer you are to retirement.
The downside to conservative investing is that conservative investments yield less potential earnings. In order to avoid this problem it is best to start young although it is never too late to prepare for retirement. The biggest part of retirement investing is asset allocation. Asset allocation is the breakdown of your retirement portfolio and includes three main parts. The three parts are stocks/equities, fixed income, and cash.
Making Retirement Investments
One of the safest forms of retirement investments are government bonds. United States government debt securities are low risk investments that yield little to no rewards. Bonds are like loans that are issued by you and these loans will be paid back to you with interest in an agreed upon timeframe.
One of the most common forms of retirement investments are IRA’s. IRA’s are individual retirement accounts (individual retirement agreements) that provide tax benefits. Traditional IRA’s and Roth IRA’s are the 2 main types of IRA’s and both provide different benefits to the investor.
Traditional IRA’s provide tax benefits on the front end while Roth IRA’s provide tax breaks on the backend. With traditional IRA’s, taxes are not applied to contributions while with a Roth IRA, taxes are applied to the contributions but aren’t applied to later withdrawals.
All methods of investing have advantages and disadvantages. Do proper research and enquire about different investing methods at your financial institution.