Even in your twenties or thirties you should be thinking about and planning for your retirement. There are large number of people who will not even think about retirement until they are closer to the retirement age and then they will be stuck without a retirement savings account to fall back on.
One of the most popular types of investments that can be a great tool in saving for your retirement is an annuity. An annuity is a contract that is set up between a holder of a policy and an insurance company. What these are is that the insurance company guarantees that there will be a return for a certain amount of capital being invested while making payments to the policyholder or the beneficiaries of the policy over a specific amount of time. This can guarantee that you will have a certain amount of income once you have retired.
A bond is a personal installment loans agreement between you and another corporation or even the government where the borrower of the money will pay you a certain amount of interest that is fixed. This money is usually paid semi- annually and will be repaid until the investment has matured.
Exchange Traded Funds (ETFs)
When speaking of exchange-traded funds (ETFs) you are speaking of a portfolio of assets that are used to keep track or the movement of the stock or bond index. When trading EFTs these are traded just like stocks. The only difference is that there is more diversification and the administrative costs are much lower than those of stocks.
If you are looking for an investment that is handled by a professional you might be interested in mutual funds. A mutual fund consists of stocks and bonds. These ETFs have low administration fees as well as commissions and when compared to taxable accounts they are simpler when buying and selling units.
Another popular type of investment for retirement is individual stocks. These work by appreciation of the stocks. When there is an increase in the process of the stocks there is an increase in the purchase price and the dividends will also increase. The downfall and disadvantage of purchasing stocks is that the prices are always changing and nothing will stay the same for any length of time. That is when the decision of buying, selling or holding onto the stock is made.
Many retirees prefer to have real estate investment funds. These are popular because they have a high cash distribution when compared to corporate dividends. Someone who owns real estate investments trusts will find themselves owning the property, managing the property and collecting rent as well as paying real estate mortgages.