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Best Low Risk, High Return, Safe Investments For Seniors

Are you searching for “safe investments for seniors“, “best investments for retirement income“, “best retirement investments 2019” or something of that nature? If so, this investment guide for seniors can help!

8 Best Safe Investments For Retirement Income

1. Real Estate Investment Trusts

2. Dividend paying stocks

3. Peer to Peer lending

4. Immediate Annuities

5. Municipal Bond

6. Annuities

7. US Treasury Bonds and Notes

8. Treasury Inflation Protected Securities

8 Best Safe Investments For Retirement Income

Most people will spend over 20 years in retirement. That is good news, but it could also be a problem as you try to make your savings last throughout your lie. Below are 7 investments that could help you get a decent return without a whole lot of risk for retirees.

1. Real Estate Investment Trusts

These are trusts that invest in direct equity positions or mortgages for various properties. They pay out dividends to investors, that are normally higher than what you could get from regular stock options. REITs are great investments to have when the stock market is in decline. This is because an REIT isn’t connected to stock exchanges, which means it is unlikely that they go down with the market.

2. Dividend paying stocks

Most established companies will pay out dividends on stocks that are higher than what you get with a safe investment like COD’s and security bonds. Because they are a stock, they aren’t as safe as a fixed income security, but it has higher potential for capital gain.

This gives those dividend paying stocks a combination of income and growth. Additionally, a high dividend will give you a longer ride for the decline of the stock market, since you may continue to get income from the stock if the price happens to fluctuate. Dividend paying stocks will often to better in a bear market since the investor can shift attention from growth to income. You can also buy and index fund that is made up of various dividend paying stocks. If you are just interested in preserving your capital during retirement, having a bit of your portfolio invested in dividend paying stocks will give you ongoing income and capital appreciation which helps with inflation.

3. Peer to Peer lending

P2P or Peer to peer lending has been steadily growing since 2005. P2P takes place online and then matches investors and borrowers in loans that would benefit them both. It is like lending without having to use a bank. The largest P2P lending platforms are Prosper and Lending Club. Most P2P investment will pay out a higher interest rate than you would get in stock investments. Although, the risk as well as the reward may vary based on who the money is lent to.

4. Immediate Annuities

Seniors that have retired may also think about investing in an immediate annuity scheme that life insurance companies offer.  Currently the annuity percentage rate is hovering around 6%, but is taxable.  There are about 10 various options for seniors to choose from with immediate annuities.  This a good option for those who don’t have the time or inclination to build or manage their own investing portfolio. For more aggressive investors who have the time to diversify this would only be a potential portion of a senior citizen investment strategy.

5. Municipal Bond

These bonds are securities that are issued by municipal governments, state, and county governments as well as various agencies. The main advantage is that the interest that is earned is tax free for federal income tax purposes. They could also be exempt from local and state taxes if you live where the bonds are issued.

A 20-year municipal bond will normally pay an average of 0.2% higher than what you get on a 30 year treasury bond. That is higher with a shorter maturity, when you add in the benefit of being tax free, they look even better.

6. Annuities

These are investment contracts that are between an insurance company and you. They will often come in various forms and may have a guaranteed return at a certain rate. Annuities can be either variable or fixed and the return rate could depend on the stock performance. Although, annuity contracts could provision that can limit the risk in an event of a declining market.

It is vital to pay attention to commissions and fees for annuity charges, which can be quite large. Most annuities will have complicated features, so take your time and really get an understanding of the product and get a second opinion before getting an annuity. Be sure to look at how annuities can change your tax liabilities.

7. US Treasury Bonds and Notes

The yields on a treasury bond or note is higher than what you will get on a COD and money market fund. This is because the bonds and notes will be longer term securities that will have a higher interest rate as a result. For instance, a treasury notes which are a debt security from the US Government that has maturities of 2 to 10 years, which pay out 2% yearly. A treasury bond will have a 30-year term, which runs at 2.5% of securities of all types and maturities which are purchased at the US Treasury portal Treasury Direct.

8. Treasury Inflation Protected Securities

These securities called TIPS are a form of US Treasury debt. What makes them different from other securities is that they pay interest and additional principal to help compensate for inflation.

TIPS will come in amounts of $100 or more for 5, 10, and 30 year terms. The yearly inflation adjustment is based on changes within the consumer price index. The percentage change with the security value will be added to principal value, instead of being paid out similar to interest. Whenever the TIPS mature, you will be paid the higher value based on the consumer price index. Although, the TIPS value may due to deflation.

Because of the inflation adjustment, the TIPS may begin to pay a lower interest rate than other securities that have comparable terms, but the adjustment can cause better results. Similar to other securities, TIPS can be purchased through Treasury Direct.

No Retirement Investments Are Perfect

There isn’t a single investment that is perfect for retirement. The best strategy is to have various types of assets within the portfolio to prepare the retirement investments for various market environments. Stay tuned for more from Senior Living Services Arizona.