Which Retirement Investment Options are best for me?
With all the different retirement investment options available out there, which ones are best for you? Depending on how much you have available for investing, how much risk tolerance you have, or what your investment goals are, you may need to look in different places.
- What are the best investment options for my retirement?
- Get steady, 7%+ returns fully-secured by collateral at MyConstant
If you’re like most people, you probably want to retire in comfort without worrying about everyday expenses and emergencies.
But a recent survey from Yahoo Finance revealed 64% of Americans will be retiring with less than $10,000 in their savings accounts, and 45% of respondents claiming they have no money set aside at all.
But here’s the good news: thanks to new technology and the evolution of the market, many traditional barriers to investing have been broken down and it’s never been easier to start.
Here’s how to take action now and start investing to build up your retirement fund.
What are the best investment options for my retirement?
1. Retirement investment options for new investors.
As a beginner investing for retirement, you’re trying out a little bit of everything just to see which ones you might prefer maintaining in the long run.
The younger you are, the better you can prepare for retirement, the longer a time horizon you can manage, and the better your returns in the future.
- Your 401(k) savings. Many employers match the contributions you put into your 401k fund, which means you should put in as much as your employer can also put in. Think of it as an automatic 100% ROI. You should never say no to that.
- Alternative investments. There’s an expanding number of alternative investment platforms offering things like P2P investment, real estate, and business investment at low entry costs to investors.
These especially may be worth looking into if you are a beginner investor with not much time left before retirement. Many platforms offer good mid-range rates with steadier interest than stocks.
- You can use micro-investing apps such as Acorns or Stash. Acorns lets you start getting into the habit of investing even with just your spare change, while Stash allows you to invest in fractional shares of stocks even with only a dollar or less.
- ETFs and Index funds are a great way to venture into the stock market as a beginner. These investment options are generally low-risk and are passively managed. Through ETFs and Index funds, you can get a little bit of everything in a particular index (such as the S&P 500, among others) or industry (like fintech, or electric cars).
2. The best investment options for retirement for low-income earners
Even if you would classify yourself as a low-income investor, don’t worry. Even if you have little money you can get started for as low as a dollar or even just a few cents in change on many new apps.
The most important thing is getting into the habit of investing regularly with any amount, no matter how small.
Here are some options for you to consider:
- Invest with a stronger emphasis on micro-investment platforms and other similar tech that let you start investing low. You can slowly ramp up your returns to build up a tidy stream of income.
- Maximize the returns on your 401k savings as mentioned above.
- Move on to ETFs and index funds as soon as you have enough to buy shares.
- Check out alternative investment platforms like P2P lending for better and steadier rates. You don’t want to move into higher-risk investments before you have enough initial capital.
Until you have enough for larger investments,, keep your options conservative. Go for slow steady gains, and make regular contributions to your portfolio. No matter how small.
3. Investment options for early retirement
You don’t have to wait to turn 65 to retire. More and more folks are adopting the FIRE lifestyle or Financially Independent, Retire Early popularized by authors Vicki Robin and Joe Dominguez in the bestseller Your Money or Your Life.
FIRE is characterized by the following strategy:
- Setting aside 50-70% of your monthly income, and funneling this towards saving and investing
- Living frugally: cutting back on living expenses with the goal of living way below your means
- Investing in low-cost index funds (as encouraged by Warren Buffett)
The typical investment strategy for someone looking to retire early might involve:
- About 75% stocks and 25% bonds, with a time horizon of about 30 years.
- Leave enough for two years’ worth of living expenses saved up as an emergency fund. This is so you don’t have to dip into whatever is invested in stocks.
While stocks and bonds are often suggested ways for people to start investing for early retirement, these assets are on the high and low end of the risk/reward ratio.
You don’t need to invest in the same things your grandparents invested in. You may find better rates in the midrange through new alternatives like P2P investments as well.
4. Retirement investment options for the self-employed
Investing for retirement when self-employed is much like investing as a normal investor as shown above except with one major difference. The 401(k).
One of the disadvantages of investing when self-employed is you don’t have a 401(k) savings fund through your company to work with. You’ll need to create your retirement nest egg yourself.
Fortunately, if you’re self-employed, you can still set up a Roth IRA for yourself. A Roth IRA is an individual retirement account that lets you put in your own contributions that are taxed on deposit, but when you start withdrawing funds many years later, are tax-free. They generally earn between 7-10% every year and earn compound interest.
You can only contribute to Roth IRAs if you are below a certain income level. In 2021 that’s $140,000 for singles and $208,000 for married couples. Every year you can only contribute up to $6,000 if you are under 50 years old and $7,000 if you are over 50 years.
5. Retirement investment options for high-income earners
If you’re saving for retirement with a high income, you’re in the enviable position of being able to invest in pretty much wherever you want. That’s because you qualify as an accredited investor.
If you’re making a higher income you (most likely) have a reasonably diversified investment portfolio by now. You can and probably should consider paying for a financial planner to help you maximize your returns.
However, if you want to go it alone, your goal when investing for retirement is still the same as with other categories: Have enough money to live comfortably. Although you may be concerned with additional concerns like estate transfer.
Here’s what you should consider:
- Mutual funds. Unlike index funds, these investments aren’t passively maintained. Instead, fund managers run mutual funds by personally picking out promising companies with the sole purpose of beating the market, thus maximizing returns.
- Real estate is suitable for any investor, as it can provide you with good cash flow, as well as tax breaks and a hedge against inflation. As a high-income investor you have lots of options:
- Buy and sell properties.
- Go the BRRRR route: buy, rehab, rent out, refinance, repeat.
- Use services like Airbnb to cash in on the short-term vacation rental trend.
- You can also leverage your professional expertise and experience by investing in a business you’re thoroughly familiar with.
- Other retirement investment options for high-income earners unlocked at the accredited investor level include:
- Crowdfunded real estate investing (via platforms like Crowd Street, Realty Mogul, or Fund That Flip)
- Equity crowdfunding (via services like AngelList, SeedInvest, or StartEngine)
- Venture capital and private equity funds
- Hedge funds
- Specialty investment funds (such as investing in cryptocurrencies and other crypto assets)
Get steady, 7%+ returns fully-secured by collateral at MyConstant
One new retirement investment option to try out no matter your income level is P2P lending. Services like MyConstant allow you to get a better and steadier return than most other investments by lending your cash to collateralized borrowers worldwide for 4-7% returns.
You don’t need a lot of spare cash to get started. MyConstant allows you to get in on the action with any amount and start earning interest.
And if you’re a more seasoned investor, we have multiple options for more diversified returns, including interest on crypto assets. Tap into DeFi lending to earn interest on your ETH, BNB, and BTC at 9% APY.
MyConstant is very beginner-friendly. We work to give you the tools to jump into P2P lending, alternative finance, and crypto with all the knowledge you need to succeed.
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