5 Best Ways To Start Investing Your Money For Retirement

One big reason why people invest is to save money for a comfortable retirement. However, it can be challenging to figure out how to go about investing. While it’s true that the digital age has given way for more information to be available over the internet, it can sometimes be overwhelming to go through a lot of details.

Image for article on invest your money for retirement 12Luckily for you, this post has made a straightforward list of the best ways to start investing your money for retirement. Discover them below and begin preparing yourself to be financially ready for the future.

1. Total Return Portfolio

A portfolio of bond index funds and stocks is ideal for newbie investors and one of the most effective ways of creating retirement income. In fact, 72% said the best way to invest $1,000 was low fee index funds. You can construct it yourself or with the help of a financial advisor.

With a total return portfolio, you’re going to follow prescribed withdrawal rate rules, allowing you a take out of four to seven percent of income each year. You can also have the option to increase the withdrawal for inflation in some years.

The ultimate target of a total return portfolio is an annual return within a ten to twenty-year average that meets, if not exceeds, the withdrawal rate you’ve been following. Please take note, though, that maintaining a diversified allocation, despite the ups and downs that the portfolio will experience from year to year, is vital for such an investment approach to work. It’s essential since there’s a chance for the returns to deviate from the average in any year.

If you’re an experienced investor and knows how to make logical, disciplined decisions, the total return approach is perfect for you. However, as already mentioned, you can hire a financial advisor if you lack the necessary experience to construct a total return portfolio correctly.

While it’s true that you can’t expect higher returns from a total return portfolio in a short period, it’s low-risk and generally safe. You can invest even a million dollars in a simple index fund portfolio and get a guarantee of an almost zero percent chance that it will lose its value. No doubt, it’s one of the best investments one can make for your retirement when done right.

2. Stock Market

The stock market will always be one of the most beneficial places for any investor to put his or her money. And it also holds for those who want to prepare for their retirement. If you don’t like the idea of mutual funds of a total return portfolio, owning a small portion of a company by buying individual stocks can be an ideal alternative. You will also have an added benefit of receiving dividends when the company that you have stocks of makes a profit.

However, since you’re going to buy stocks individually, you have to invest smarter and do your best to minimize making wrong decisions. You will also need to make the decision of when to sell your stocks. The price of your shares will grow as the company’s value increases over time. That said, you’ll have the option to sell your shares for a profit at a later date.

3. Retirement Income Funds

A retirement fund will automatically allocate your money into owning a selection of mutual funds across a diversified portfolio of bonds and stocks. The goal of this type of fund is to produce monthly income that gets distributed to you. Retirement income funds are an all-in-one package that will help you accomplish a specific objective like funds for retirement.

Retirement income funds vary in terms of the monthly income they produce. While some make use of some of the principal to meet payout targets by generating higher monthly income, others preserve the principal by having a lower monthly income.

You’ll have the chance to access the money at any time. It will also allow you to retain control of the principal. Keep in mind that the future monthly income subsequently goes down if you’re going to withdraw some of the principal.

4. Savings Accounts

You can put your money in a savings account while allowing it to grow by collecting interest. This way, you’ll have the least risky way to prepare for retirement. The only problem with this type of investment is that you’ll get little to no returns because of their very negligible risk. Well, as always the case, low returns come with low-risk investments.

However, if you want a risk-free sum of money to use in emergencies or purchasing investments without touching your other investments, savings accounts are worth having.

Cut out of an old man standing next to a load of coins

5. Rental Real Estate

If it’s a stable income source that you want as you retire, investing in a real estate property that you can rent out is ideal. However, before buying a rental property, it would be best to calculate all potential expenses first since there will inevitably be maintenance requirements along the way. On top of the maintenance expenses, other unanticipated expenses are also inevitable, so you have to include all of them over the time frame you expect to own the property. Also, since the property won’t get rented one hundred percent of the time, you have to factor in the vacancy rates.

While it isn’t a get-rich-quick proposition, it can be an excellent retirement investment as long as you’re willing to put time and effort into learning how to run a rental real estate business effectively.


Congratulations on making it to the end.

Always remember that the different ways to invest for retirement that this post has discussed work better as part of a single, overall investment plan.

The investments above aren’t individual solutions but instead should work together to build a retirement savings for you.


Interesting related article: “What is a Pension?