When you are young, you can play the stock market and take risks. As you grow older, you become conservative. Some economists are advising young people to resort to credit at 1.5% interest for selected indexed funds at the ratio of a 2:1 exposure for their first few years in the workplace. These are risk- free, low cost funds that perform well than other funds. You can then gradually pay off the loan within the next 15-20 years. One sure and tested way to protect your retirement savings is by investing a big portion of your portfolio in government bonds such as the TIPS. Another investment strategy is to participate in actively managed funds for a bigger return and target date funds for a fully diversified investment for retirement portfolio.
Asset allocation strategy including your present and projected future work or business income plus other benefits is also one proven method to seriously consider. As you mature, economists and financial experts say that it is best to reduce exposure in the stock market because of economic and personal circumstantial unpredictability and uncertainty. A well balanced portfolio of stocks, bonds, mutual funds and other alternative investments is a positive reflection of diversification.
One smart way to develop other ways of retirement investing strategies is to read success stories of retirees. You will find that the common factors they have are careful planning and determination to succeed. The earlier you plan for your retirement, the better for you. Plan on investing the maximum allowed amount a year in your IRA. If you do it between the age of 21-65, your nest egg will be very substantial at age 65 because of the compounding process. Furthermore, if your 401k is also invested properly, you will have an exciting and adorable lifestyle ahead of you beyond your retirement age.
Based on some statistics, if you get to the age of 30-40, this is the time where your career gets uplift. This is the age where you become mature, start adding more responsibilities because of kids. This is also the time when promotions happen and steady increase in income. At this age bracket, you have better options for additional savings and greater diversifications. People start investing in real estate by purchasing their homes payable in 30 years, buying one or two cars, budgeting for vacations, education and investing for retirement, etc. Your key is to be able to have an effective management control of your expenses. Spend more when times are fine and in your favor. Reduce your spending when times are against you.
When it comes to initial withdrawal from your investment portfolio when you retire, many financial planning experts recommend a maximum average withdrawal of 4% and gradually increase it annually to level the playing field against inflationary cost. But it is up to you. Once you pass your retirement age, you have other options which are to look for opportunities where you can continue generating additional income as consultant or an independent contractor. In this technology age, baby boomers should learn how to keep up with the computer and internet age. There are many online opportunities being offered by plenty of websites for retirees to earn right in the comfort of their homes with just a lap top computer and the internet.
With this in mind, you must always have a contingency plan or back up plan in case of unexpected obstacles and hard times beyond your control. Avoid regrets, self-pity, blame pointing and depression. Be flexible but do not be feeble minded. Once you make your investing for retirement decisions, always maintain an optimistic attitude and hope for the best. Your diversified investment portfolio is the key to have a substantial nest egg. Keep your body and mind healthy so that you will be able to enjoy your lifestyle in your beyond retirement life.