Best Investments For Retirement
I bought a book called How To Retire Happy by Stan Hinden. In the section on investments it lists 5 investments for retirement. They are multisector bond mutual fund, high quality dividend-paying stock portfolio,variable annuity, and then a managed diversified portfolio strategy and a managed portfolio of exchange traded funds.Today we are going to focus on stocks.
Stocks Are A Top Asset
Stocks are a little piece of a company that you own. They tend to grow in value over time. Stocks are usually what you own in your 401(k). A mutual fund is a group of 100 to 200 companies that are owned by many people. They ae mutually owned.
Advantages of Mutual Funds
One of the advantages of mutual funds is that you own more than one company. If something bad happens to one company it will not hurt the whole mutual fund. There is safety in numbers. A mutual fund is safer than one single stock. You own a whole basket of companies.
One Top Fund For Years
In the past 10 years I have noticed one mutual fund that is consistently at or near the top of stock mutual funds. It is the Fidelity Contrafund. Morningstar rates mutual funds and they put Fidelity Contrafund in the top 40 out of 8000 mutual funds. This is information we need to know to help us retire happy with plenty of money.
Use the Power of Compounding–the Milionaire’s Secret
It is really hard to save enough for a comfortable retirement. But fortunately we can use the power of compounding to help our funds grow faster. In fact they can grow at a faster and faster rate due to compounding. You begin to receive growth of your original investment plus growth on the growth of your investment. If you have a 10% growth one year and then 10% growth the next year your total growth is not 20% but 21% because of compounding.
Investing is a Necssary Life Skill Today in America
All of us who want to retire need to learn the skill of investing. Virtually all millionaires invest. Most millionaires are over 60 because it takes time to grow an investment. Time is on your side. The more time you have the more sure you can be of having enough money to retire in style. In retirement we want to go from doing what we have to, to doing what we want to.
My Plan For Investing
Say I have $100,000 to invest. I could invest it all at once. But what if it goes down 10% in the first month? I could invest $20,000 a month for five months. That way I automatically buy more when the price is low and I buy less when the price is high. This plan forces me to buy low so I can sell high.
Of course I want to put my money into one of the best performing funds like Fidelity Contrafund. The fees are relatively low, the sisk is below average. All this according to Morningstar.
Good luck with your retirement plans and happy investing.
Norman
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