Picking Safe Investments for Retirement

Picking Safe
Investments for
Retirement
By www.ProfitableInvestingTips.com

http://profitableinvestingtips.com/bond-investing/picking-safe-investments-for-retirement
There is a difference between investments
that are currently making money for you
and investments that will be safe into your
retirement years.

A sad example of investors who did not
exercise due diligence with their
investments is the Bernie Madoff pyramid
scheme.

One hundred seventy-six individuals,
banks, pension funds, and charities were
invested with Madoff and happy to be
getting a great return on their money.

When the Madoff house of cards collapsed
there were $65 billion in faked gains and
investors lost about $18 billion of their
investment capital.

Picking safe investments for retirement is a
skill separate from making money in stocks,
real estate, and other investment vehicles.

The fact of the matter is that when you are
retired you will want to enjoy retirement and
be spending all of your time watching your
portfolio.

How can you invest safely for retirement
and not end up like Madoff’s clients?

Picking Safe Investments for
Retirement: What Are Some
Choices?

US Treasuries
Inflation Protected Treasuries
AAA Corporate Bonds
Dividend Stocks
Real Estate Investment Trusts
ETFs

Retirement: US Treasures,
Inflation Protected

In our article about how to invest without
losing any money, we mentioned US
Treasuries.

US Treasury bills have maturities of a year
or less.

US Treasury notes have maturities from two
to ten years.

And, US Treasury bonds have maturities of
ten to 30 years.

Each of these investment vehicles is
backed by the “full faith and credit” of the
US government.

The risk of loss of any of these if held to
maturity is nil.

How to invest without losing any money in
US Treasuries is to hold them to maturity
or only sell them at a profit.

Investors lose money in treasuries if they
buy when interest rates are low and sell
when rates are high.

If you buy treasuries when rates are really
high you have the choice of holding to
maturity and enjoying the return on
investment or selling for a short term profit.

If you expect to need to use the principal
from your investments over the years,
construct a ladder of Treasury bills, notes,
and bonds so that you will not need to sell
bonds at a loss due to high interest rates.

The inflation protect variety of Treasury is a
good idea if you expect inflation to take hold
again like in the 1970’s.

In such a case the return on the Treasury is
adjusted for inflation.

Retirement: AAA Corporate
Bonds

AAA investment grade corporate bonds are
about as safe as US Treasuries.

The two US companies that issue AAA
grade bonds are Johnson & Johnson and
Microsoft.

As with Treasuries, create a ladder of bond
maturities so that you do not need to sell
long term bonds at the wrong time.

Retirement: Dividend Stocks

In this case, you do not necessarily want
the highest dividend.

What you want is the most secure
dividend.

The Motley Fool published a list of
companies that have been paying
dividends for more than a century.

Johnson Controls
Stanley Black &
Decker
ExxonMobil
Eli Lilly
Consolidate Edison
UGI
Procter & Gamble
Coca Cola
Colgate Palmolive
York Water

In retirement, it is a nice thing to get a
dividend check or two every quarter.

And, it is nicer, if the dividends are likely
never to stop.

If the past is any guide, these companies
are a good bet for retirement investments.

Retirement: REITs, Real
Estate Investment Trusts

The rationale for picking a real estate
investment trust is that these investments
tend to do well even when the stock market
falters.

And these investments pay dividends as
well.

Retirement: ETFs

In retirement it is a good idea not to put all
of your investment eggs in one basket.

Thus, investing in a mix of US Treasuries,
corporate bonds, dividend stocks, and
REITs is a good idea.

For the stock market in general, an ETF or
exchange traded fund is a good way to
benefit from the steady rise in value of the
market while avoiding losses from an
individual stock.

Picking Safe Investments for Retirement

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Picking Safe Investments for Retirement