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How to Determine if You Have the Best Investment Portfolio for Retirement

Investors need to consider different ways to ensure they have enough money in retirement. You might be wondering if your retirement plan is growing in the right direction. Investing for retirement is a long-term goal and it brings on a set of extremely complicated decisions, and many of them come all at once. However, the best news is that it is never too early or too late to start planning. Better yet, there are three things about your investment that are completely under your control and can have a sizable impact on your retirement, including how much you invest, the rate of return you earn on your investments, and the number of years those investments have to grow. Here are some topics to consider and discuss with a financial planner in order to build a strong investment portfolio for retirement.

Have You Considered the Cost of Cash?

Cash is an essential part of everyone's finances, and plays an important role in saving and investment. In terms of investment risk, cash is also probably the most conservative option. While it is always prudent to hold on to some cash, given the rise in inflation rates cash will eventually lose nearly half of its value over a 20 year retirement. Long-term investors need more robust strategies to preserve the value of their savings. If you do keep some cash on hand, consider depositing it in high-interest savings account so you can benefit from the returns and have immediate access to it if needed.

Are Your Investments Diversified?

Diversification is a must in any retirement investment portfolio. Diversification protects you from losing all of your assets if there is a change to one area of the market. The sharp decline in stock prices in recent years are proof enough that investing all of your money in one area is a risky strategy. Make sure your money is properly split not only in retirement accounts among stocks and bonds, but also spread out over stocks, cash, bonds, physical assets, and investments in other income-producing sources. By spreading out your assets, you can better hedge your bets against uncertainties in market fluctuations, inflation, income stream demise, and other economic factors beyond your control.

Have You Considered Alternative Investments?

It is always a good idea to explore other investment alternatives like mutual funds and exchange traded funds that invest in commodities, real estate, and energy. These alternatives can typically achieve above-average returns and reduce risk because they are less likely to move in tandem with stocks and bonds. Many alternative investments also have high minimum investments and fee structures compared to mutual funds and ETFs. While they are subject to less regulation, they also have less opportunity to publish verifiable performance data and advertise to potential investors. Alternative investments are favored mainly because their returns have a low correlation with those of standard asset classes. Because of this, many large institutional funds such as pensions and private endowments have begun to allocate a small portion of their portfolios to alternative investments such as hedge funds.

Are You Actively Monitoring the Progress of Your Investments?

You have probably entrusted the experience and expertise of a financial planner to guide and monitor your retirement funds, but do you know how your money is really doing? It is advisable to do an annual retirement account review to give you a chance to evaluate how your money is faring against expected results. This also represents an ideal time to make any adjustments as circumstances arise. You might discover your asset allocation seems off balanced, you may have less diversity than you think, your needs may have changed, or you could have been subjected to new tax rules.

Have You Considered Your Longevity?

You don't know how long you're going to live, of course, but it may help to know the average life expectancy of people your age. Many people underestimate their life expectancy because they do not realize it changes as they grow older. Realizing you are going to live longer means you can expand your investment horizon past the day of retirement. This means you can consider riskier assets like stocks, commodities, and alternatives. Your longevity will allow you to ride out market cycles in the long run, especially if you are starting your retirement investments early.

With the current state of the industrialized world, many people are trying to cope with the changes of the world's economies. These changes have substantial effects on retirement outlooks and retirement realities. The fact that Americans are living longer, healthcare costs are rising, daily living costs increasing, and the need to depend more than ever on retirement funds are causing a difficult retirement picture for many. It is prudent to evaluate your retirement investment portfolio regularly, so that you can adjust and revise your retirement strategic plan accordingly.

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Why investment in bond is the best investment?

Investment in bonds when done wisely and with expertise brings in the best profit so its best kind of investment.But then for for good investment and prediction choose an expe (MORE)