Once you reach the retirement age of 65 or, nowadays, 65+; on account of the pre-set amount of discretionary funds available to you; your investment options begin to shift into a whole different stratosphere.
While it will come as no surprise to you-for financial experts have been telling you this for years-in order to amass a significant prudent reserve, planning for retirement is something that needs to occur in one’s thirties, forties and fifties; if not sooner.
Yet, even with such careful and methodical financial planning, one can enhance their financial portfolio by looking into a host of alternative long-range investment options including: real estate, artwork | rare antiquities, and venture capital business opportunities, as well as, more traditional financial practices designed to generate steady, life-long income.
Having stocked away a sizable amount of savings, once one advances into their twilight years, he | she may find himself | herself in a fortunate situation wherein a range of available investment options exist. While some of the following possibilities may seem excessive to some; to others they may fall well in line with their mindful planning and added amounts of free time.
To some, the world of real estate wheeling and dealing may seem appropriate for the likes of a Donald Trump-type character than for themselves. However, once apprised of how the industry works, individuals, on a basic level, often tend to find it much simpler to understand and navigate than they initially envisioned.
Because of the recent havoc played out in the stock markets, many investors sought out safer places in which to house their money. For this and additional reasons, the real estate industry is now foreseen as almost a mandatory part of a viable, long-term investment strategy.
While any financial expert will counsel you that real estate is a strong component of any retirement plan; the ownership of property -due to the potential risks of significant financial loss and additional costs associated with tax assessments (though many real estate investments carry the potential with them of being tax-free until withdrawals begin to be made from the investment)- is not something into which to enter lightly. Note: Watch out for mortgages taken out on pre-owned properties.
Focusing on the positives, real estate ownership is legally permissible under all forms of IRAs. According to the letter of the law, investors may buy into the following types of properties: single family homes, multi-unit dwellings, condominiums, apartment buildings, land areas, and even designated real estate investment trusts (REITS)-though they tend to be accompanied by high overhead costs.
The advantages of adding real estate to a retirement plan include: potential high rates of return on one’s investment; increased diversification within one’s portfolio; and reduced risk over time.
The two disadvantages include: 1) Requirement of added efforts to liquidate other investments and | or retirement plans in order to generate necessary capital, and 2) Alignment with a financial investment company which authorizes the purchase of real estate under their retirement plans.
To legitimately purchase real estate under a retirement plan- you can opt do so via a Roth Individual Retirement Account, single-user 401K plan, or traditional IRA account. The only stipulation is that you must do so in conjunction with a financial custodian that permits the purchase of real estate under the umbrella caveat of their retirement plan.
Artwork and Rare Antiquities vs. High-Priced Ticket Items
In lump sum form, not only as a method for increasing one’s net worth, investing in tangible goods, can also be a tool for exploring one’s personal interests. Yet, anyone would caution that you do not let one’s own preferences interfere with the making of a sound business decision. For example, when you purchase a costly painting; you do so because you have conducted research on the artist and the anticipated range in which their work is anticipated to appreciate over time. It is either ill-advised or a fine line exists between purchasing fine art for which you have an affinity and that which you have a belief will increase in value over time.
Yet, the overall process of selecting pieces of artwork or other precious goods, researching the artists and their value in the art world; studying the art markets, gauging the best times to buy and sell; can all prove to be stimulating and educationally rewarding activities.
The same can be said for attending auctions and gallery openings. Should the art world hold an interest to you; then looking at it from a business standpoint may hold great appeal.
High-Priced Ticket Items, an area encompassing boats, expensive automobiles, planes and jewelry, is a more gray area for many of these items can depreciate with usage. Rarities and classics that are well-kept (hardly ever used) are one thing but to purchase expensive Neiman-Marcus Christmas catalog luxury items and call them an investment, well that may be more an issue of self-delusion and being a spendthrift.
Considering venture capital at your age? Well, there are two sides to this coin. One side is tarnished and involves an unsolicited, unscrupulous salesman attempting to sell senior citizens shares in a non-existent, or highly unprofessional business. The other, more favorable-gilded side, has the individual conducting extensive research on a promising venture that is related to someone they know; comes highly recommended by a financial expert; and | or is linked to an organization, cause or business entity with which they are highly familiar.
In any event, before anteing up any dollars, you should first assess the amount you are considering investing versus the amount you can reasonably afford to lose. A second mandatory step you must take prior to sealing the deal is to gain a firm grasp over basic capital funding terms such as: IPO-initial public offering; mergers and acquisitions; and boards of directors and shareholders.
Third, you then should use such terms to properly evaluate the proposed business; the respective marketplace; and the anticipated returns. And then fourth and final, you need to carefully and thoroughly review, under the guidance of an accredited professional, i.e., attorney and | or CPA, the terms of the agreement, i.e., amount of shareholder involvement; pay-out terms; and tax liabilities.
Should you harbor any doubts pertaining to a proposed business’ legitimacy or operational practices; do not hesitate to make an inquiry with your state’s Better Business Association, consumer advocacy group and | or state’s ongoing fraud investigations department.
Better to be safe than sorry, especially where one’s hard earned finances are concerned.
Bonds and Treasurys
To go a more risk-free route and receive consistent pay-outs throughout one’s lifetime i.e., maximize income while simultaneously safeguarding the principal investment; one highly recommended financial arrangement entails the purchase of bonds or treasury notes.
In a practice known as laddering, investors employ two steps: 1) Purchase bonds or Treasury notes with varying maturity dates 2) Followed by one single annual purchase to replace the product expiring that year.
Though one can opt to purchase treasury notes or bonds; Treasurys are widely considered the safer investment. Another option worth exploring is that of Treasury Mutual Funds which, if purchased in “target maturity fund” form, on account of the fact that they will only mature during a specific year, carry with them the benefit of already being in pre-structured ladder form.
Investment Clubs and Seminars
For both companionship and support purposes, senior investment clubs and seminars can be an entertaining and informative use of one’s time. While clubs tend to be more informal and guided by the members, seminars may be produced by financial institutions. Though such “organized” sessions usually are accompanied by steep entrance fees, so long as they are hosted by reputable companies, they do have the potential of providing very keen and forthright information.
If interested in joining such a club or partaking in such a seminar, the best place to locate such forums is in your local newspaper’s advertisement or classified section and via the Internet.
Happy and Safe Investing
When making prudent investment choices as a senior, two general rules of thumb apply: 1) Have a consultant with whom you can regularly check in should the market become volatile or your lifestyle take a dramatically different turn; and 2) Routinely monitor your investments whether in tangible or money market form. The sooner you learn of a shift, the sooner you can take action to sell or buy, based upon the information available to you.
On a national level, you may want to check with the Senior Investment Resource Center at www.nasaa.org, before outlaying any moneys for an investment.
A final word to investment wise: ensure your financial stability over the long-term so that you may enjoy and appreciate the longevity of your life.