Retirement Investments Tips and Options

The importance of retirement investments should not be underestimated. Ideally, a person should start setting aside money for retirement well in advance. Failure to do so can cause financial hardships as a person gets on in years. There are many investments to choose from and it is wise to research all the options. Each investment option has its own advantages and disadvantages. A lot also depends on how much money a person has available and when he or she is planning to retire.


Low Risk Retirement Investment Options

It can be wise to play it safe when choosing a retirement investment. Those who are looking for low risk retirement investment may want to consider a 401(k) plan, a FDIC insured account or a fixed annuity. When taking out low risk retirement investment, one is guaranteed of getting the initial capital back, even if the investment itself is not overly profitable. However, the return on low risk retirement investment is quite low.

Many employers offer 401(k) retirement saving plans to their employees. A person can save money in this account and the interest earned on these funds is tax free until a person reaches retirement age. A fixed annuity is purchased through an agency. A person provides the agency a lump sum of money which is then invested by the agency. The annuity policy holder is then paid a certain amount of money on a regular basis. A FDIC insured account is an ideal option for a person who has already retired or is about to. A person who invests in a FDIC insured account can earn interest on his or her money without having to make a risky investment.


High Risk Retirement Investments

High risk retirement investment have the potential to be more profitable. However, one can also easily lose his or her initial investment and even end up in debt. Equities, debentures and mutual funds are all risky retirement investment. One may want to work with a financial consultant before investing in any of these funds, as each type of investment is complex and there is no guarantee on the principal that has been invested.

Before choosing a retirement investment, it is wise to consider all the pros and cons of a particular investment. One should also be aware that in nearly all cases there is a hefty fee should the money be pulled out of the retirement investment before a certain date. A retirement investment is a long term investment and once the funds have been placed in such an account they cannot be touched until a person reaches a certain age.

In many cases it is wise to take out a number of retirement investment. Having a mixture of low risk and high risk retirement investments will help to provide one with sufficient capital while at the same time reducing risks. It is important to choose a retirement investment carefully. One will need to consider how much money can be invested, what type of investment gives the best returns with the lowest risk and how long one has to wait before tapping into the retirement investment funds.


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