Top 5 Smart Investments for Baby Boomers
There are a considerable number of Baby Boomers that don’t have any retirement savings whatsoever. If you are a Boomer and you want to start saving and investing for your retirement, you are in the right place. In this article, we will show you some ways how you can invest, and in some cases even increase your income.
Different Generations, Different Investments
As each generation has lived under different economic circumstances, they also have distinct habits about what they want to do with their later money. Baby Boomers, born between 1946 and 1964, are retired or getting close to it. Contrary to analysts’ recommendations, a large percentage of Boomers have a riskier allocation; 8% of this generation is entirely invested in stocks. Those coming on behind—Gen X and Millenials—will face a very different economic reality than Boomers and will be making different choices.
What Are the Market Implications?
There is some concern about the fact that the Boomer generation will all retire around the same time. However, Reuters shows that it won’t be as bad for the stock market as people have feared. Markets are efficient at pricing when they already have advance knowledge of the coming trend. Big surprises can have a negative impact on the market, but this is not the case with the mass retirement of the Baby Boomer community because the market has long anticipated it.
Smart Investments for Boomers
If you are a Boomer, you definitely want to save some money for your retirement fund…and there are some risks you should be aware of. Following are 5 options that we believe can be a smart investment for you:
1. Savings and Cash Accounts
Putting retirement funds in high-yield savings accounts is a good investment because this is one of the most risk-free paths. You can always put your retirement funds in cash accounts or certificates of deposit. The Federal Deposit Insurance Corporation insures these types of options, but the typical yields are relatively low.
Bonds are fixed-income financial assets and are literally a loan to some entity – banks, companies, governments. If the loan is for the government, is a public bond, if it is for companies, it is considered a private bond. U.S Treasury bonds are safe bonds for investors, but their returns are not that high.
3. Equity Exchange-Traded Funds
The stock market can be risky and volatile – just think about the 2008 crisis. Despite the short-term risk, when we talk about long-term performance we see that the Standard & Poor’s 500 has been consistent throughout the years.
Despite the several market booms and busts – due to the market fluctuation and economic disruptions (like the great depression and the financial crisis), the rolling annual return of the S&P 500 has always had values between 8% and 15%.
4. Mutual Funds
Mutual funds are financial instruments that allow investors to start investing with little money. Mutual funds are professionally managed, typically stocks and bonds. This option is one of the most popular when it comes to retirement investments. Mutual fund returns tend to vary widely, such as the returns on the exchange-traded fund, taking into account the fund’s allocation.
5. Precious Metals
Another popular investment among retirees is precious metals like gold and silver, but their returns aren’t known for being particularly great. However, despite the fact that their value is dependent on market supply and demand and can be influenced by several factors beyond the investment perspective, precious metals tend to be a good answer to inflation in the long term.
Start Saving for Your Retirement
You are always in time to start saving for your retirement. You can start by taking a look at these 5 options and see what suits you best. There are also other alternatives, for example: annuities, investing in real estate, or buying individual stocks. However, the latter comes with more risks to retirement investing.
You can also draw inspiration from some of the investment strategies used by the younger generations: Follow the example of Millennials and move assets to cash to protect against a market drop. Or like many Gen Xers, consider working with a responsive financial professional.