The unstable economy has many people worried about what will happen to the funds they’re saving for retirement. Here are a few pointers to help you ease the stress and grow your retirement accounts more safely.
Common Retirement Planning Mistakes
When most people start investing towards retirement, their thought process usually involves one question, "Hmmm. Which mutual funds should I put my money into?"
Because this is the only question that most people ask themselves, they often find themselves in a world of hurt just a short time down the road. The question that you should ask yourself when considering how to fund your retirement is, "Hmmm. What investment types should I put my money into."
Real Diversification
Most people know that diversification is a good way to reduce risk. But, when you consider that a huge majority of people invest only in mutual funds, it’s easy to see that diversification is often misinterpreted. Even though you may have invested your retirement money into a variety of mutual funds, they are all subject to some of the same market risks, as we’ve seen in recent months.
Real diversification requires investing in something other than just the stock market. Next we’ll discuss some of the other options you should look at when planning your retirement.
Real Estate
Real estate is one of the most solid investing options around. Returns are usually stable, very seldom is the real estate market depreciating, and your investments will never be worth zero. Real estate investing could include purchasing rental properties, purchasing your first or second home, or investing in commercial property.
You don’t have to be rich to invest in real estate either. One way to get involved in real estate with very little money is through Tenants in Common property purchasing. This option allows a group of people to invest in one property, and split the costs of ownership.
Options trading
Many people know how to invest in stocks and mutual funds, but are not aware of the potential gains that are available in options trading. There are many option trading strategies that work in both bear and bull markets, and even stagnant markets. You can also choose investing methods that are very low risk, and provide much higher returns than the average mutual funds. Some options trading strategies can provide over 100% in annual return, with just one trade each month.
Foreign exchange
Trading currencies can be very simple if you are set up on the right system. Automated trading systems are available with very high success rates, and very minimal monitoring requirements. Forex trading allows you to invest in worldwide markets that are not subject to the same risks as domestic markets. Some systems have been known to provide over 500% in annual return, with minimal surveillance!
Summary
Whatever you choose to do, make sure that you are not putting all of your eggs into one basket. Get out of some of your mutual funds, and explore some more options. When you choose not to diversify, your are setting yourself up for disaster.
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