Choose Where to Put Your Retirement Money Wisely — Here’s How

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When making decisions about how to invest your retirement money, education pays off. You do not want to gamble with your retirement money, nor is this the time to try something new and unproven.

There are several steps you can to take to figure out where to put your retirement money. You will be wise to consider them all before you make a decision.

1. Understand How Investment Markets Affect Your Retirement Money

Despite the turmoil in the investment markets, those of us who understand how investing works will tell you that when it comes to your retirement money there is nothing that beats a diversified portfolio. But what does that mean?

You look at the historical returns and risk associated with your asset allocation model. and the amount of money you need to withdraw each year. You then rebalance your account on a regular basis and stick with your long term investment plan.

You must develop realistic expectations that some years you will have better returns than other years, but you view your retirement money portfolio over the course of your life, not over the next three months or one year. Learn more about how investment markets and your asset allocation decision will affect your retirement money:

2. Make Retirement Money Trade Offs

There is no free lunch. You can put your retirement money in safe investments and accept the guaranteed yet lower rate of return that they offer.

You can choose a retirement income fund. and perhaps receive more monthly income than with a safe investment. but you must accept the fund will fluctuate in value.

No investment is safe, produces income and grows its value all at the same time. Educate yourself on investment basics to understand the trade-offs you must accept when investing your retirement money.

A diversified portfolio owns some investments that are safe, some that are designed to produce income, and some that will grow to provide income ten to fifteen years down the road. Here’s a few resources that can help you understand the trade offs you must make with your retirement money:

3. Get Advice About How to Invest Your Retirement Money

The best thing you can do before you decide where to put your retirement money is get professional advice. You would be best off to do all (or at least a few) of the following:

4. Avoid Mistakes With Your Retirement Money

People make mistakes with their retirement money because of greed or ignorance. Greed kicks in when they see an investment that they think will deliver above average returns.

When you understand how investing works, you know that above average returns are not possible over an extended period of time. Many investments that appeal to the greed side of you turn out to be frauds or ponzi schemes. If it sounds too good to be true, stay away.

Ignorance is a factor when you don’t know what is and is not possible. This makes it easy for someone to talk you into something that is not a good choice for you. To avoid retirement money mistakes read:

5. Make a Plan Before You Decide What to Do With Your Retirement Money

Making a plan helps you make smart decisions with your retirement money. You money has a job to do. It is no longer about how much you can accumulate; instead it is about delivering a reliable monthly retirement paycheck. Investing for income is different, and your approach needs to change.