Your Retirement May Need Some Stock Investing
Given the fact that the true cost of retirement keeps rising, traditional retirement planning investments such as certificates of deposit (CD’s), savings accounts and money market accounts may not generate enough income to meet expenses anymore. You may end up spending more money during your retirement years than your working years so be prepared.
A good financial move is to keep some money invested in CD’s or money markets for safety. To stay ahead of the curve though you will need some of your investments to grow. Generating that growth may require you to consider investing some of your retirement income into the stock market. The stock market is not for every investor; be sure to understand the advantages and disadvantages before you move forward.
What Goes Up, Must Come Down
The return on your money invested in the stock market can be very rewarding and make you feel like a millionaire “on paper”. Until you sell an investment it’s value is only “on paper”.
If you spend like the millionaire that you are “on paper” and the market drops before you sell those investments, there goes your millionaire status. You not only lose status but it may take a very long time for your investments to generate the money you lost.
Once you have entered retirement, you will probably want to stay in retirement. The only way to accomplish that is to discipline yourself. Do not base your budget on investment gains; instead consider any gains from your stock investing to be fun money; extra money not needed for your basic living expenses. The money invested in the low-return, safe investments can be used for living expenses.
Low Returns Do Have An Advantage
Low returning investments may be all the discipline you need to stay on budget. If you know that your CD’s, money markets and savings accounts are intended for safety not high returns you may be more likely to curb your spending. Living on a reduced retirement budget is not as bad as it sounds as long as you see it coming.