Retirement investing is not what it used to be. The traditionally higher percentage of bonds as a person ages is just not working. So, what are safe investments for retirement?
Choosing value stocks that are secure and growing in time-honored and diverse industries is one major thing you can do. Companies which are well-funded and who have increased dividends steadily over the years may not be hot high-dividend yielders, but they are steady and solid, and do quite well in a venue like a Roth IRA, compounding and growing over the years. Check into the classics like MMM and Johnson and Johnson(JNJ) or Proctor and Gamble (PG.) Doc Eifrig, a Retirement Millionaire guru, suggests not investing more than 5 percent of your funds into any one stock. The old adage about not having all your eggs in one basket has always been a wise quotation.
Dividends are recommended in a global context by Street Authority, an independent advising web-letter. These fund managers are striving for convenience and have diversified holdings to make them a safer venue for your money. A good example of this sort of ETF or Exchange Traded Fund, is the Global X super Dividend Fund (SDIV,) as explained in the above-linked article. This is a way to hedge your bets and have some else do the homework.
While everyone would like to have a secure retirement portfolio that never needs adjusting, those days may be over. You really need to check over your investments at least quarterly and make changes if things have gone bearish, or if sectors have shifted radically. Generally, if you study and have the time and inclination to work with individual stocks, you can do as well or better than mutual funds, with their extra fees and minimums. Online discount brokers including ING’s Sharebuilder, offer fairly low rates, and the convenience of armchair investing.
There are still some large income funds that are reasonably priced, such as Vanguard’s Managed Payout Distribution Focus Fund (VFDFX) or their Growth and Income Distribution Fund ((VPGDX). These index funds have high minimums, but will generate monthly retirement income without exhausting capital. And, you may want to consider some tax-free municipal-bond investments that would yield more with the tax benefits, such as Nuveen Premier Muni Income Trust (NIF) or Investco Insured Muni Income Trust (IIM). And then there are still many, many REITS, which are paying high dividends due their own tax benefits and regulations. Find one that is fairly recently established so that you can coast a bit with their timed-longevity. An example of this would be Hatteras Financial Corp. (HTS.)
A small amount of your retirement funds should still be in readily liquid form, so consider the slightly higher yields at a regional credit union instead of a regular bank, and the ultimate back-up of owning a bit of gold as “insurance” may be wise council. Retirement should be a time of security, and with a bit of planning, you can relax and reap those rewards.