The main point to remember when thinking about your future retirement is this: your retirement money has to last for a lifetime – your lifetime. So don’t rush in without doing a bit of homework first. Retirement planning is not the time to try untested schemes or gamble on uncertain strategies. Take the steps necessary to figure out how to invest your funds for retirement; you’ll thank yourself for it later.
Expectations should match reality
Investment markets can be tumultuous. When it comes to investing, however, the experts will tell you that nothing beats a nicely diversified portfolio.
Develop an asset allocation model to help you determine what portion of your retirement money should be in bonds versus stocks. Studying the historical returns and risks associated with your asset allocation model can help you understand the amount of money you should withdraw each year. You can then rebalance your account. Doing this on a regular basis helps you stick with your long-term investment plan.
No one gets a free lunch
Everyone wants a nice, safe investment which provides a steady income and grows in value over time. A perfect investment that doesn’t require maintenance or oversight; just ignore it, let it grow and reap the rewards.
There is no such investment. You must accept trade-offs when investing and it pays to educate yourself on how investing works. Your diversified portfolio will include some investments that are safe, some designed specifically to produce income and some that won’t provide income until later in life.
Education and advice: a winning combination
The best thing you can do before investing your retirement money is to educate yourself and make a plan.
You can improve your understanding of all things financial through talking with professional investment advisors, doing independent research by reading finance websites and magazines, or taking classes on personal investing. Then develop your plan for your retirement.
It doesn’t have to be a cumbersome, time-consuming undertaking. Something as simple as a 15-minute retirement plan can get you on the road to financial independence in your golden years.
Avoid the big mistakes
Don’t get greedy; this is a common mistake too many make.
When you educate yourself on how retirement investing works, you’ll learn that above average returns sound fantastic but they simply are not possible over an extended period of time. Many of those “get rich now” investment systems that appeal to your greedy side turn out to be frauds and Ponzi schemes.
If it sounds too good to be true, it probably is.
Develop a plan and stick to it
Developing a plan makes it easier to make smart decisions about retirement investing. Your money has a job to do: it must deliver you a reliable monthly retirement paycheck.
The decisions you make for your retirement are the biggest financial decisions you’ll make in your lifetime. If you simply cannot deal with financial matters, consider hiring a retirement planning adviser to help you out. Whatever it takes, get it done before it’s too late.