Safest Retirement Investment

Safest Retirement Investment


By Ric Dalberri, Founder of Retirement USA

Safe is good. Particularly, as we mature to our golden years, we want more comfort, sa
fety and good health. Safest retirement investment means
what is at risk with them, how to find them and most importantly, what is your
risk tolerance.

The main purpose in the safest retirement investment is to
protect your principal. The next safest retirement investment purpose is to
provide interest income. Even though you want to have a safe investment, safest
retirement investment has risk to them. For example, there are three:

*Loss of principal

*Loss of purchasing power (depending how long you tie your
principal up), due to inflation.

*Risk of liquidity. Needing your funds before maturity of
your investment and having to pay penalties or early withdrawal fees.

Rule of thumb, sort of speak, is to keep three to six months
of living expenses on hand depending on how secure your job is. Most people
only have approximately two weeks on hand. The closer you get to retiring,
safest retirement investments should be foremost for your portfolio.

To find safest retirement investments should include
guaranteed principal. Where will you find such an investment? Social Security,
pension plans, savings accounts, c.d.’s (certificate of deposits), government
investing (treasuries, bonds), and annuities. Most investors exhibit poor judgment
when it comes to pouring money into equities (stocks and mutual funds). Why?
Very simply put, emotions.

For twenty years ending 2008, a survey of the S&P Index
showed that the average return per year was 8.35%. Could you take the
roll-a-coaster ride of the stock market  ? The study shows that investors pull their
money out when the market drops. They continually buy high and sell low by
chasing what is called ‘trends’. This is irrational behavior to human
reactions. Never sell equities in a down market.

Be brave and stay strong. Now, that being said, the safest
retirement investments is in the science.

You’ve heard the expression, ‘they have it down to a
science’. It’s proven academically that a disciplined approach to investing
will give you higher returns. Many banks now have an investment department
which houses brokers. Check with your bank. It can be a third party investment
firm. These brokers can purchase C.D.s anywhere in the country in addition to
bonds and annuities. See if you can do this yourself online with reputable
companies (do your homework) to save commissions. In your quest for safest
retirement investments, as with any investment, consult a financial specialist such
as a CPA, accountant or tax attorney.