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How to Make Wise Decisions for Your Retirement Investment Portfolio?

Saving money for funding a happy retirement is probably one of the biggest reasons why people invest. Hence finding a perfect balance between retirement investment return and risk is critical for a successful strategy for retirement savings.

So, here are a few suggestions to ensure that you are on the right path to make the most feasible and smartest decisions with your savings.

Develop a retirement investment portfolio for risk-free returns

A common technique for creating income for retirement is to develop a retirement investment portfolio of stocks. You can always take assistance from a financial advisor if you are doing it for the first time. This portfolio needs to be designed for achieving a decent long-time rate of return.

It allows you to follow the prescribed rules of withdrawal rate all along. Typically, it will enable you to take out anywhere between 5% and 15% annually. You can always make inflation adjustments and increase your withdrawals.

Using income funds for retirement savings

The income funds for retirement are special types of mutual funds. These funds will automatically allocate the money across a portfolio of bonds and stocks in a diversified manner. Your investment will be managed with an objective for producing income that you will receive on a monthly basis.

The retirement income funds are developed for the provision of an all-in-one package constructed for accomplishing a specific objective. Some funds will also create higher monthly incomes and they will also use some amount from the principal for achieving the high payoff targets. Other funds have a low-income payout for the preservation of the principal.

Immediate annuities

Annuities are a type of insurance, not an investment. They have the sole purpose to create income, and that is what is required in retirement. Therefore, with the immediate annuities, you are actually creating and ensuring future income.

Your insurance company will provide you with a guaranteed income stream in exchange for a lump sum amount. The income stream is for life or it might be for a particular time in the future. This guarantee is as authentic as the quality of the company that is issuing the insurance. You can go for fixed as well as variable immediate annuities.

Retirement investment in Bonds

While purchasing a bond you are loaning your money to the other party. Now the other party can be a corporation, a municipality or the government. Your borrower agrees to pay a certain amount of interest for a specific time period. At the end of the period, your principal amount will be returned to you. The yield you receive from the bond is a bond fund and it can be your steady retirement income source.

Renting real estate

Renting property can be a good source of retirement income but you will have to deal with the maintenance of that property as well. When you own real estate any unexpected expenses are inevitable.

Therefore, you need to calculate all potential expenses that you might incur over a rental period of your property. And then you will need to consider the vacancy rates as well because no property is rented at all times. You need to keep in mind that investing in real estate is only a kind of business and it is not a get-rich-quick idea.

Variable annuities with income riders

Variable annuities are different from immediate annuities that we have talked about earlier. Here your money is going in an investment portfolio. You will always participate in the profits and losses of all the investments in that portfolio. But for some additional fees, you can also add guarantees. These guarantees are the income riders.

A rider works like an umbrella; you might not require it but it will be there to keep you safe in the worst circumstances. Riders with income have many names. You can call them guaranteed benefits for withdrawals, riders for living benefits, or lifetime income riders. Each of these riders works on different formulas and guarantee types.

Reserve retirement investment strategies

Keeping a portion of retirement investments in safe alternatives is necessary. The safe investment allows you to protect what you own. It is not about generating high-income streams. You need to have an emergency fund or a reserve account as a retiree.

However, you should not use this account as an available asset for producing retirement income. This account is there as something that you can rely on in the time of any unforeseen expenses during retirement. In case you don’t know what to do with your money, just go for safety investment during the time you take to make a well-thought decision.

Closed-end funds

Most of the closed-end funds produce quarterly or monthly income and this income can come from dividends, interests, and covered calls. In some cases, it might also come from a return on principal.

Each of these funds has a different purpose. Some would go for stocks while others go for bonds. Some prefer a dividend capture tactic while others prefer covered calls. Hence, you need to do your own research before buying these.

Dividend Income Funds and Dividends

You can go for a dividend fund instead of purchasing individual stocks that pay out a dividend. A dividend income fund will manage the stock on your behalf. If the companies decide to increase their dividend payouts you will not only generate steady income but can also increase it over the years.

But you need to keep in mind that during the slumps, companies might also decide to reduce the payouts or stop them altogether.


REITs or real estate investment funds are like mutual funds owning real estate. There will be a team of experts that will manage the property. This team will pay the expenses, collect rent and they will collect a fee for doing all this.

The remaining income will be distributed to you as an investor. REITs might specialize in one property type. It can be for an apartment building, motels, hotels or office buildings. Registered brokers sell REITs and they will receive a commission for it. You can also go for REITs available on a stock exchange.

Final thoughts

Life brings many unforeseen changes and you cannot avoid them by any means. Planning for a steady retirement income is essential so you can effectively deal with any unexpected events. There are various alternatives that you can choose. The decision of which one to go for is up to you.


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