Best Investments to Make as a Senior

senior couple investing

All investors need to continually look for the best investment options that generate the highest returns, but senior citizens face unique requirements for their investments. Those who stop earning after becoming 60 years old look for stable income for their investments to meet their living costs, making capital protection crucial than appreciation.

Seniors can still benefit from making sound investments. It can help defray the cost of medical or home care when they reach the stage where they need to be in a home or be under hospice care. It is not a morbid thought, but it does help to know that they won’t add to the financial responsibilities of their loved ones when that time arrives. If, on the other hand, they stay healthy, then they will have passive income for travel and relaxation. Either way, it’s a win-win situation.

Savings Account Investments

Although a savings account isn’t technically an investment, if you set aside your cash in a savings account bearing interests, you’ll make money based on this, making it a “unique” investment. Since the government backs saving accounts offered by FDIC-insured banks — you won’t lose any of the money you invested even if the financial institution goes “belly up.” Additionally, opening savings accounts with online banks nowadays pay higher interest rates, paying 2% and more since they’re dissociated with overhead costs of physical institutions.

This investment is a generally safe choice for seniors, and all you need to do is look for FDIC-insured online banks.

Certificates of Deposit Investments

Certificates of deposits with FDIC-insured certifications are often risk-free. When you invest in a certificate of deposit or CD, your bank will return the cash you invested with interest, which is generally higher than standard bank savings account interest rates. While you may need to pay for penalties if you withdraw funds before their maturity date, you can use them whenever you need the money.

Money Market Account Investments

Money market accounts are high-interest investments consisting of low-risk pools of investments, including savings accounts, treasury bonds, and CDs. This investment lets you earn higher interest rates than your savings accounts. However, you’ll likely have higher minimum balance requirements and have limited withdrawals every month and state cycle.

Treasury Securities Investments

This investment is backed and credited by the U.S. government and is a generally safe investment guaranteeing you won’t lose any of the principal amounts you invested. There are four types of Treasury securities, including:

  1. Treasury Bills

    – Also known as T-bills, don’t pay interest. However, you can buy them at less than face value while receiving value when they mature.

  2. Treasury Bonds

    – These have longer terms, usually lasting for 30 years. However, T-bonds pay interest every six months. It’s ideal for seniors looking to secure their families.

  3. Treasury Notes

    – T-notes are in the middle, having terms lasting between two to ten years, providing interest income paid every six months. Plus, investors receive face value when it matures.

Corporate Bond Investments

Investors can purchase corporate bonds individually or invest them through corporate bond funds, representing a pool of different corporate bonds. The better choice is individual corporate bond funds since they spread risks over several bonds in the pool while maturing faster, minimizing interest-rate risks. However, they’re not FDIC-insured, meaning investors may need to work with asset-management professionals to find the best corporate bond fund with a track record of great performance.

Dividend-Paying Stock Investments

stock rates

Dividend-paying stock investments, compared to other stocks like growth stocks offering higher returns, have fewer risks. Although they aren’t entirely free from dangers, they pay quarterly dividends, and they’re relatively liquid. When investing in this, make sure to choose companies with a good track record of paying dividends increasing over time instead of ones with the highest yields.

Preferred Stock Investments

Investing in preferred stocks carries more risks than bonds but fewer risks than common stocks. Dividends are paid to those with preferred stocks before they’re paid to common stockholders, but only after distributing them to bondholders. It’s an excellent middle-of-the-road investment for seniors whose risk comfort levels are higher than risk-free.

Municipal Bond Fund Investments

Municipal bonds represent loans investors can make when purchasing a bond from an issue. This investment is issued by non-federal government entities like cities, counties, municipalities, and school districts. They represent a collective investment in multiple municipal bonds, with the usual perks of earning tax-free interests, primarily when investing in bonds in the state where you currently live. You can buy municipal bond funds through mutual funds or an exchange-traded fund (ETF).

Although you can buy individual municipal bonds, these carry higher risks than municipal bond funds.

Retirement is a crucial stage in one’s life. After all, everyone expects to secure their lives after retiring. Investing is one of the best choices to achieve this — and placing your money in one or two of the options mentioned ensures a financially stable post-retirement life.

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