In these uncertain economic times, how do you plan for a successful retirement? Step 1 is to educate yourself, Step 2 is to have a plan, and Step 3 is to constantly review your plan. Educating yourself is a must, and there are of course financial planners out there to help, but it is your financial future that is on the line. Therefore, it is just smart to know at minimum the basics. You must also remember that the financial world changes constantly, which is why it is so important that you are always reviewing your plan. Lets take a look at some potential investments that you may consider when building your portfolio.
REIT (Real Estate Investment Trust)
So what is a REIT and why is it a possible addition to your portfolio? The U.S. law states that REITs pay out 90% of their taxable income to fund shareholders. There are three varying kinds of REITs, the Equity REIT, the Mortgage REIT, and a combination called the Hybrid REIT. The Equity REIT is one in which the owner invests in and and owns properties, therefore the profits gained from this type of REIT is mainly from the rents collected on the properties owned. The Mortgage REIT is one in which the owner invests in the property mortgages, meaning they loan the money needed to the owners of real estate, or they purchase existing mortgages. The profits earned on Mortgage REITs comes from the interest earned on the mortgage loans. Finally, the Hybrid REIT is when the owner has a combination of Equity and Mortgage REITs. So how do you invest in a REIT? If you are interested in becoming a REIT you can purchase a mutual fund that specializes in real estate or you can purchase directly from an open exchange.
Precious Metals IRA
With the ever decreasing value of the dollar and fluctuating stock market many people are taking a look at the precious metal IRA as a way to diversify their retirement portfolios. As with any investment, there are no guarantees, but many financial planners believe that a precious metals investment has a certain level of safety in a rocky economic environment. The price of precious metals has shown a past trend which is diametric of the stock market. Gold is a good investment primarily due to the fact that it is not dependent on the performance of anything else in which to gain value. Physical gold ownership is a considerable investment when looking at an IRA savings standpoint.
The Importance of Choice
Though the stock market has been a bit inconsistent as of lately, it has been the advice of many analysts that when choosing to invest a wise choice is to go with tried and true performers. Regardless of which options you decide to invest in when building your portfolio, it is key that you are making informed decisions and not just allowing someone else to choose for you, after all this is your future, and only you can decide what is right for you.
Fran Delaney, the author of this article, is a financial writer from Los Angeles, CA.