Investment Tips for Seniors – It’s Never Too Late

(5 Minute Read)

If you’re concerned about a continuing income after you’ve collected your last paycheck, you may be considering financial strategies such as playing the stock market, purchasing mutual funds, or investing in real estate. But unless you’ve had prior experience in investing, it can seem daunting to start now. However, the truth is that investing isn’t just a young person’s game; these financial opportunities are a real option for senior citizens. Before you get started in building a diverse and robust portfolio, there are a few tips to help guide you on your way.

Find a Financial Planner

Your savings accounts will likely be your primary source of funding for your investment moves. But how do you know if you’re taking out the right amount? Will you end up overextending yourself, or are you perhaps not investing aggressively enough? For anyone getting started, a financial planner is a great choice to ensure you’re not feeling around in the dark for answers. However, it’s important to ask questions in finding the right one for you. Here are a few to ask of any financial advisor.

  • Do you act as a fiduciary?

Fiduciaries are legally required to keep all clients’ interests ahead of their own. This means they’re not lining their pockets with payments or perks from recommending one product over another.

  • How are you compensated?

If you are choosing to hire a financial advisor, you’ll want to be sure you can afford it. Ask them if they’re receiving a flat fee or working on commission.

  • Do I work with you directly?

It’s not uncommon for a financial advisor to be simply representing a firm. Make sure that you’ll be working with this individual directly, not meeting with associates or assistants.

Understand Your Investment Options

Investments can be best described as owning assets that will pay off down the road. You’re essentially laying out cash that will be eventually multiplied at a later date once that investment has matured, or become worth more than you initially paid. There are three basic categories of investment options: stocks, bonds, and real estate, and each one has its own risks and rewards.

  • Stocks

Perhaps the most common form of investing, buying stocks means you’re purchasing equity in a company.  Within stocks, the two basic groups available for investment opportunities are privately owned and publicly traded companies. Privately owned means they do not have a public market for their shares, and will often consist mainly of smaller companies. This might be a local entrepreneur or a family friend. At any rate, these are very much high-risk, high-reward situations and should be approached with caution, as 90 % of start-ups will fail.

Publicly traded companies are far more reliable, but require a deep understanding of the market’s fickle behavior to see much of a return on investment. For example, many choose to simply stick with “blue chip stocks,” though this will only produce an average return of 10% per year. However, others choose a more aggressive investing approach by making money from bad companies, in which even the slightest change in market could produce huge returns on investment, anywhere up to 100%.

  • Bonds

Bonds are long-term investments that will provide a steady and sturdy cash flow. A bond is essentially an IOU that is promised to be paid back to you with a fixed interest rate. The borrowers are generally municipal organizations, such as a local government or city. They do provide a lower return of investments than the stock market, but they’ve long since been considered a tried and true method for securing a consistent – and, most importantly, safe – income stream.

  • Real Estate

Mark Twain once said “Buy land – they ain’t making any more of it.” Another source of steady income stream, are real estate investments. There are many options in real estate. Whether you rent to tenants or start flipping properties to sell, bear in mind that it is the option that requires the most oversight and active participation. To avoid bearing the brunt of that much work, consider a real estate-based partnership, in which a large group (20-30) of individuals will collectively invest in a piece of property or land.

Of course, the one thing you must have in all these equations is capital. If you’re using your retirement savings for something else, the liquidity you need might seem far away. But, did you know If you still maintain a life insurance policy, you can sell all or a portion of your policy for an amount greater than the cash surrender value? This is known as a life settlement and can provide extra income for investing. Our website has answers for you, to these questions and others, like, “What is a viatical settlement?” Visit Life Settlement Advisors to learn more.

Case Study:

Dave and Bonnie celebrated their 50th wedding anniversary this past year. Dave and
Bonnie own a joint survivorship life insurance policy they bought for federal estate tax purposes many years ago. Due to recent federal tax changes, they no longer need the coverage and planned to surrender their policy until their financial advisor suggested selling the policy. They sold a portion of their policy for $175,000 and retained $100,000 of death benefit for their only child.

Leave a Reply