6 Simple Tips for Retirement Investing

Bearded man studying investing basics on his tablet
Foxy burrow / Shutterstock.com

This story originally appeared on NewRetirement.

We all know that we need to save for retirement, but that is hard. However, it might be even harder to figure out how to invest for retirement.

Investing requires some level of expertise and a way of thinking about money that is not innate for most people. Furthermore, the way you need to think about investing definitely changes as you age.

How to invest for retirement is a very complicated question to answer. However, we hope the following will help you feel prepared and comfortable to take on any of the unexpected events that life throws at you.

Following are several simple tips for how to invest money for retirement and set you up for success.

1. Set goals

individual retirement account
Don Mammoser / Shutterstock.com

Outcomes are almost always better when you set a goal — retirement investing is no exception.

When you are deciding how to invest your money, you should think about the following:

  • Do you want to earn a specific rate of return?
  • Are you trying to guarantee that return?
  • Is it important for you to protect the original investment amount? Or will you be okay if you lose some money?
  • What is your time horizon? Will the money stay invested for one year or 30?
  • Will you be withdrawing money from the account? How will those withdrawals impact your other goals?

When thinking about investing outside of an IRA or 401(k), you need to have a plan. “You need to recognize the strategy of getting rich vs. staying rich,” says Christopher Girbes-Pierce, founder and CEO of Enlightened Wealth Management.

This means that you need to evaluate where you are in life. When you are in your working years, you are building wealth by concentrated risks, like working a job or owning a business, but once you get into your retirement years, it’s all about diversifying your investments to keep your wealth, Girbes-Pierce explains.

Before setting a goal for your investments, you might want to first find out how much you need in retirement savings. The NewRetirement retirement calculator is an easy-to-use tool that gives you immediate detailed answers.

2. Match your investment to your goal

Investing
crazystocker / Shutterstock.com

Depending on what your goals are, different investment types will be better or worse for you.

  • Stocks: Stocks can be risky. Investing in stocks can put your original investment amount at risk. However, stocks can offer the highest rates of return.
  • Mutual funds: Mutual funds are a single investment into a range of different companies or investment types. Funds are considered less risky than stocks while still offering a better rate of return.
  • Bonds: Bonds can offer a guaranteed rate of return, making them appealing if you need or want security.
  • Annuities: Annuities guarantee your income. In most cases, you know exactly what the outcome will be with an annuity.

You can learn more about these traditional retirement investments.

3. Diversify

Investing
PHOTOBUAY / Shutterstock.com

Investing can be like everything else in life — we want it all, and we want it right now. Most of us want the best possible return on investment with the least possible risk.

Diversifying your portfolio is a great way to achieve that seemingly impossible objective.

Diversification refers to the practice of investing some of your money one way and other parts in other ways to give you the possibility of growth while also protecting you from risk. Diversification could be defined as the practice of not putting all of your eggs in one basket. By spreading your investments, you reduce the chance of losing money.

Want more information? Explore asset allocation.

4. Keep costs low

Senior woman working from home on laptop and phone
Branislav Nenin / Shutterstock.com

Once you have made the decision to diversify your retirement investments, Girbes-Pierce shares that it’s important to stay away from high-cost investments, such as certain types of annuities and actively managed mutual funds.

“The charges that you will incur from just one year of managing a portfolio with an expensive upkeep will eat away at your overall portfolio,” Girbes-Pierce says.

This also applies to investments that are in taxable accounts. If you aren’t maxed out on your IRA and have real estate investments, for example, Girbes-Pierce suggests keeping those funds in your IRA. This way, you won’t pay taxes on them like you would be if you put that investment into a taxable account.

If you aren’t sure what you are paying in investment fees, find out.

5. Be aware of your access

senior worker
Africa Studio / Shutterstock.com

Another aspect to be aware of when figuring out how to invest for retirement is how much access you will have to your funds.

“You may get to a point where you want to go on a big vacation and need to take some of your funds out of an annuity, but then when you try to take it out you’re charged a penalty fee,” says Girbes-Pierce.

Many people aren’t aware of these charges when they sign the papers. Be sure to get an answer before you agree to anything. You have the right to know how much access you have to your funds without penalties at any given time, Girbes-Pierce reminds.

6. Be cautious

Happy retiree
Robert Kneschke / Shutterstock.com

You may have a child or grandchild come to you with a brilliant business proposal asking for an investment, but it’s never a good idea to dip into your retirement account to fund these sorts of projects, Girbes-Pierce explains.

“This kind of behavior is very speculative and I consider it gambling, which is fun and exciting, but most people probably don’t want to do that with their retirement money,” says Girbes-Pierce. “People can end up getting into a lot of trouble this way.”

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
8 Things You Should Never Put in a Microwave
8 Things You Should Never Put in a Microwave

A microwave can be a busy cook’s best friend. But heating certain things in a microwave can cause disaster.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

8 Ways to Snag Extra Savings at Walmart
8 Ways to Snag Extra Savings at Walmart

Are you aware of all these ways to boost your savings in Walmart stores and at Walmart.com?

7 Surprising Ways Retirees Waste Their Savings
7 Surprising Ways Retirees Waste Their Savings

You can make your retirement money last a lot longer by avoiding these costly mistakes

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?
Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?

The rules are complicated when it comes to eligibility for survivors benefits.

27 Things You Should Never Pay For — and How to Get Them for Free
27 Things You Should Never Pay For — and How to Get Them for Free

When you know the tricks, you can save big on all kinds of useful things that others pay for.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

10 Things I Always Buy at Trader Joe’s
10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.