Once you have figured out what kind of money you have in order to prepare for your retirement, it’s time to figure out exactly what you want to be able to accomplish with it. You will need to sit down and form a plan to be able to consolidate you retirement money and see how you effectively build on it in order to remain successful.
Risk Considerations When Consolidating Your Retirement Money
When you look at consolidating your retirement money and making it work harder for you, it’s important to pay attention to what your personal risk profile looks like. This means not only how comfortable you are when risk is involved, but also what kind of time you want to allow your investments to mature or to recover from a downfall. So, what does this mean for you?
This is how you can measure how much risk you are willing to experience in order to hit your goals. If you are willing to risk more for a higher gain a later date then you can be said to have a higher risk tolerance.
This takes into effect how long you are looking at before you actually enter into retirement.
Reaching Objectives for Investment by Consolidating Your Retirement Money
After you have determined what type of risk you are willing to take for your investments, you need to figure out what your objectives are for this money. There are 4 categories to take into consideration when you are working on your strategy.
A growth investment objective is appropriate for someone who is looking for a more long term investment and can stand to be a bit more aggressive. REITs, real estate, ETFs, mutual funds and stocks fit into this category.
If you have an income objective then you are probably looking at getting regular payouts from your investments. You can look at some more stable investments like government securities, municipal bonds and utility stocks. They can have some risk attached depending on the route you look at.
This is appropriate for those investors that are completely low risk. Savings bonds, treasury securities and CDs are some good examples to consider, because even though they pay some interest, they are guaranteed by the United States government. You can also consider indexed and fixed annuities.
This objective mainly looks at the way that you can lower your taxes for your chosen investments.
How to Tailor Your Objectives to Your Position and Consolidate Your Retirement Money
You should take a look at your age and the amount of time that you want to spend on your investments when you are working on your investment strategies and figuring out your objectives. When your retirement is farther away you can take more time to be aggressive with your money.
This means that you can have a more growth oriented objective. While there can be more risk in these investments, you can certainly do more towards consolidating your retirement money when you are able to spend longer letting them ride the ups and downs of the market.
No matter how much time you are looking at before you get to your goal of retirement it’s important that you diversify your portfolio. This can help make sure that even if one of your high risk investments fails, then you are still covered well. Basically it is the equivalent of not putting all of your eggs into one basket.
Other Things to Remember About Your Retirement
When you start planning out how to best consolidate your retirement money, don’t forget about your home’s equity, any life insurance payouts or your social security benefits. This isn’t money that you can look at investing if your retirement is still decades away, but it can be a good idea to take into consideration when you are looking at how much you can risk right now. As you get closer to retiring, you can even think about taking it early or even just doing more with your money because of this little cushion.
Even with all of this information, it can still be worth your time and money to speak with a financial planner. Make sure that you give them all of the information that you have been putting together and remember, they do this for a living. You can take your time and find help that you trust and they can help lead you down the right path for your unique situation.
Figuring out how to best invest for your retirement can seem like a lot of effort, but don’t forget that this is your future that you are working on. A little bit of planning now can set you up for a much more comfortable time when you are older and take a huge weight off of your mind.