A diversified portfolio is your best defense against serious market upheaval. As you move into retirement, the right investments, including those that offer regular income, can provide you with the wealth you need to succeed in the long-term, all the while providing your portfolio with capital appreciation.
As you put together your Baby Boomer retirement portfolio, here are 7 great retirement options for solid investments:
1. Self-Directed IRA with Precious Metals
One of the best ways to hedge against future inflation, and to ensure that you have a form of money that has always been — and will likely always be — seen as money, is to open a self-directed IRA and invest in precious metals.
Before you take this step, it's important to understand which precious metals are eligible for inclusion in a self-directed IRA. Certain gold, silver, and platinum coins can be invested in as part of your IRA strategy.
Make sure you follow the appropriate steps to convert some of your retirement assets to precious metals. Once this is done, you have the advantages of precious metals, and the tax advantages of the IRA.
2. Dividend Paying Whole Life Policy
Even though many “experts” poo-poo the idea of whole life insurance as an investment, the truth is that some policies can be useful to Baby Boomers considering their retirement options. A dividend paying policy provides you with regular income, on top of the benefits of a whole life policy.
You can get a whole life policy with a stable premium, and that covers you for your entire life — no matter how long you live. Plus, you receive dividend income from the policy (dividends aren't guaranteed, however).
Before you make this investment, though, be sure it fits your situation and your needs. With a portion of your retirement portfolio diverted to this type of policy, you can produce relatively safe income during retirement.
3. Real Estate Investment Trusts
If you want to add a little real estate to your portfolio, but you aren't interested in owning property, a REIT can be a great option. Not only that, but REITs pay regular dividends. Your investment could result in regular income during retirement, as well as an investment that benefits from capital appreciation.
Even if you own actual property, a REIT can still be a great investment for your retirement portfolio. Learn more about them here.
4. Rental Properties
Regular cash flow from rental properties can offer a great retirement investment option for the Baby Boomer. Not only do you own a hard asset (the property) that could appreciate in value, but you also enjoy the income that comes from rents paid.
And you don't even have to be actively involved if you don't want to be (although you should consider the tax implications before you make it completely passive).
Hire a management company to take care of your properties, and you can receive the income benefits without the need for too much effort on your part. Then, when you are ready to sell, you can reap the benefits of a capital gain.
5. Government Bonds
You're not going to see a lot of capital appreciation with government bonds. However, the right strategy with these securities can offer you regular income that is relatively safe. If you are simply looking to preserve some of your capital, and perhaps get a little monthly income on the side, government bonds can be a good choice.
TIPS can help you alleviate some of the risk that comes with inflation, and municipal bonds come with special tax advantages on top of offering regular income.
6. Your Own Business
Part of developing effective income diversity is creating your own business. When you have your own business, you can essentially determine how much you will make. If your own business is something that you are interested in participating in as part of your retirement, to give you something to do, you can mitigate some of the tax consequences that can come if you aren't a material participant.
If you have built your business to be successful without you, and maintain interest in it, you can still benefit from the income from the business, and use it as revenue during your retirement.
7. Antiques, Collectibles, and Art
One of the best retirement options, at least if you want to surround yourself with beautiful things, is to consider some of the antiques, collectibles, and art that you have. These investments can delight the eye and enhance your quality of life, while at the same time growing in value.
The right investments in this area provide you with tangible items that can be traded if necessary, and that are likely to appreciate in value over time. As long as you are selective about which items you invest in, and you are sure of their quality and value, you could do well over time.
Plus, you'll enjoy the emotional and sentimental investment as well as the financial investment.
Where should you start?
As with all investments, make sure that you carefully consider your risk tolerance and situation, and construct an appropriately diversified portfolio that meets your needs and is likely to help you reach your retirement goals.
We recommend everyone that has an IRA, 401k, pension plan, or annuity to convert it over to a self-directed IRA because of the flexibility and control it gives you over your investments. To learn more about them and how to get one set up, click here.