A recent study by GoBankingRates.com found that 42% of Americans will retire broke, with less than $10,000 currently in their bank accounts. If you’re one of the more fortunate to have savings and are trying to figure out how to make it work for you so that you can enjoy retirement, you’re obviously already in a better place than many, but you’ll want to invest that money wisely in order to support the lifestyle you want after your career has ended. So, really, what is the best investment to support your retirement?
While there is no one best way, these options are typically some of the better investments when it comes to supporting your retirement.
Investment to support your retirement #1: The stock market
While most people know that investing in the stock market usually pays off, there are still far too many who are afraid to take the risk. That doesn’t mean investing all your money there, rather smaller sums of money over time, something referred to as “dollar cost averaging.” In simple terms, when the market is higher, you don’t buy as many shares, but when it’s lower, you purchase more shares so that over time you’ll have a lower average share price.
The risk, of course, is that you buy high and sell low during a stock market crash. That’s why it is imperative to success to avoid taking new long positions near all-time highs. On the other hand, the really juicy opportunity comes after a crash as explained in why investors should love market crashes.
Investment to support your retirement #2: Work-sponsored retirement
If you have the option, be sure that you’re contributing as much as possible to a work-sponsored retirement account like a 401K. Many employers match every dollar you contribute with a dollar, which gives you a 100% return on your investment.
Investment to support your retirement #3: Peer-to-Peer Lending
Peer-to-Peer lending brings the opportunity to act as “the bank,” through platforms like Prosper and Lending Club that allow you to loan money to individuals in small increments and earn a good rate of return, typically at least 6 percent. You won’t be lending strangers people large sums of money but investing in increments that are as little as $25 over hundreds or thousands of different loans.
Investment to support your retirement #4: Real Estate
There are multiple ways to invest in real estate, for example purchasing vacant land and building a home to rent often nets a significant amount of income. You can choose to manage it yourself or hire a property manager and just collect your checks that can be added to retirement savings. Of course, you’ll have to think about maintenance and other costs, such as the upkeep of the land, repairs and insurance.
You may also want to consider looking at hunting land for sale. You can buy that and then lease it to hunters on a seasonal or yearly basis. While it may not make as much as a rental property, there’s no upkeep to worry about and you’ll likely make money as the land accrues in value. Income-earning land is a great choice for those closer to retirement as it’s a safe bet.
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