Considerations for Investing in Retirement

You are starting a new chapter in your life when it comes to retirement. This is when you can spend time with your loved ones and enjoy leisure. But you have to maintain financial security in order to sustain the lifestyle you want to sustain throughout your retirement.

You need to have clear goals for your retirement.

Think about when you plan to retire and the lifestyle you want to have at this age. You have to consider the level of income needed to sustain this desired lifestyle and whether you want to leave a legacy for your loved ones. Once you define your goals properly, you will be able to create a roadmap for your investment strategy. One of the factors to consider when it comes to Retirement Investment is your level of risk tolerance. This is how much you can withstand when it comes to fluctuations in your investment values. You have to consider your ability to withstand this along with your willingness. A greater tolerance of market volatility is achieved with longer time horizons. You need to assess your sources of income, needs for liquidity and financial stability. If you have investment experience, you have to consider your comfort level when making these decisions. There are different types of investments to choose from and the market conditions can vary.

To manage your risk, you need to diversify your investment portfolio.

Here you need to spread your investments across different geographic regions, asset classes and industries so that the impact on individual investment losses can be reduced. You can allocate your assets across real estate, bonds and stocks. The length of time you expect to hold the investment is called the time horizon. This will have a big impact on your investment strategy. Think about what your retirement timeline is and what your investment goals are when it comes to choosing the right investment for your portfolio. If you are considering a shorter time horizon, you may need to go with a more conservative approach. But with a longer time horizon, you can allow for more exposure to growth oriented investments like stocks. 

You have to balance your income needs

And growth when it comes to the retirement portfolio so that you can reach your financial goals. Stocks are growth oriented investments and these will have the potential for appreciating your capital over time. But these will also be subjected to greater volatility. Dividend paying stocks and bonds are income oriented investments and these will provide you with a regular stream of income. But the penitential for long term growth of these will be low. To manage market risk and volatility, you need to maintain a long term perspective. You can integrate defensive strategies to your investment strategy such as allocation of assets, downside protection strategies and rebalancing. Your returns can be affected by investment fees and expenses so you have to compare the costs of different investment options. These costs will include transaction costs, management fees and expense ratios.