Investing in retirement can be a challenging issue, but with the right support and advice, it can be made a lot easier. There are numerous books, workshops, and advisors who have plenty of answers.
The key is to find an effective way to sort through all this large amount of information and obtain the data needed to make informed decisions. Let’s discuss a bit how to go about this process of due diligence and research.
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” –– Paul Samuelson —
Investing In Retirement — Where to Begin
It doesn’t matter what one’s current status is in terms of current investments, whether retired, unretired, or anywhere in the career spectrum. These strategies create the correct mindset to do research effectively and create an effective game plan that will last a lifetime.
One of the best ways to get started is to interview a number of financial advisors and compare what you find. Ideally, you want someone who is a fiduciary as they are required by law to put your interests first rather than their fees and commissions.
Fiduciaries are also required to avoid any conflicts of interest and provide all necessary and relevant facts to every client. Here is a tool from Smart Asset that will grade any financial advisor, fiduciary or not, and make sure that they adhere to all requirements of a fiduciary.
Also no matter how much you are impressed by an investment advisor, don’t hire the first one. The more you interview, the more you will learn and discover helpful information. You may find several that you like, but you will be able to identify the one that is right for you based on your current needs and situation in life.
Also, question any prospective financial advisor as to credentials and licenses such as being a Certified Financial Planner (CFP) and having passed tests for Series 65, 66, and 7. Also, learn how they base their fees and commissions and request a few references.
You can also get vital information on any financial advisor through Investor.gov and learn additional information about the due diligence process. Another helpful site is Broker Check. All of this will provide you with plenty of information to get you started on the right track.
Identify your Comfort Zone
“I’m investing. I’m taking a lot of bitcoin, selling it as the price goes up, and putting it into real estate. Because then if bitcoin goes to zero – which, it’s an experiment, it could – I won’t be on the street.”
Now a person’s comfort zone in relation to risk is affected by several factors, most importantly by age. When retired or close to retirement, a person can ill afford to lose any substantial money. A more conservation approach is called for.
But at the same time, regardless of age, a person needs to use sound financial strategies in diversifying among several asset classes. I won’t go into details here other than once again encourage finding a fiduciary investment advisor with whom you can build a long-term relationship based on trust and integrity.
Here’s a risk profile test you can use to get started. These tests are designed to determine both your risk capacity (based on your current financial situation) as well as your risk tolerance (comfort zone).
By figuring out your risk tolerance you can see what are the financial borders of your comfort zone and whether you want to stay within or exceed it a bit. The risk capacity deals with the reality of your financial situation based on age and a few other factors to ensure you maintain the quality of life you desire.
Once you have a clear picture of these factors you will be in a stronger position to make sound investment decisions. Any challenges can be dealt with based on the proper data.
Proper Investing in Retirement provides Peace of Mind
“Investing is a business where you can look very silly for a long period of time before you are proven right.”
It is never too late to get sound financial advice. Solutions to any challenge are out there. It’s a step-by-step process regardless of age to attain specific goals and objectives.
The most important thing is not to feel helpless as answers are available. Spending time on research and due diligence will provide a good solid foundation to make any investment decisions at any point in life.
Just as answers are available we must ensure they are good answers. This is why getting multiple opinions from a variety of financial professionals is essential before making any decisions.
For example, some advisors will encourage diversifying your portfolio, which is all well and good. But what exactly do they mean by diversification?
Are they speaking about diversifying your funds among different stocks and bonds, or are they preferably recommending diversifying your money among a number of different asset classes which significantly increases safety by reducing risk. This is called asset allocation.
Although the three (3) most common asset classes are cash, stocks (equities), and bonds (fixed income), there are also other choices such as real estate, futures, precious metals, and other derivatives. Each has its pros and cons.
“Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth.” — Robert Kiyosaki —
The important thing in terms of gaining peace of mind within this investment game is to do your own homework, get some good advice, and then make the best decision possible. We all know that there are no guarantees in life, but there are ways to put things in our favor.
I look forward that you have found some value here to assist in investing in retirement. There is no magic pill but it can be an enriching experience.
Stay focused and enjoy the journey,
Joseph William
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Joseph William,
Thank you very much for this post. The strategies you outline are very helpful. How I wish all those who’re about to retire can read this because most people go into retirement without good advice.
I will surely email this article to my cousin so that she can have options based on good advise.
Thank you, Kayamba. Your thoughts and comments are much appreciated.