The most important investments you’ll ever make are the ones for your retirement. Investing in this future ensures financial independence for you, and maybe even a legacy for your children. There are a few simple things you can do in retirement investing that will give you the best possible outcome.
Don’t sink all your wealth into real estate. Though land and houses seem like a great choice for retirement investing, it may not be such a great deal. Even though you can live in your investment, you also run the risk of housing values decreasing rather than increasing. Right now, and at many times historically, the housing market has resulted in a bubble economy – overinflated prices that at some point are going to burst. Instead, buy a house in a decent neighborhood that you like, and invest the rest of your cash in diversified stocks.
Diversify in general. Retirement investing is tricky. You’re trying to look at the long term, and unfortunately no one can see the future. Remember Betamax? 8-track tapes? The Delorean? Not every great looking investment is really a good one; and no matter how good an investment looks, it may fail. Therefore, you should spread your retirement investing across a wide variety of stocks, industries, and even countries. Picture it as having anchors placed all around your ship; even if one of them breaks, your ship’s not going anywhere.
Even if you believe in “buy American,” invest globally. It’s important to invest in our country; it keeps us strong. But many of the most lucrative businesses are offshored these days. There’s nothing unpatriotic about investing in other countries and benefiting in the profits here in America. In fact, if America ever falls into a recession, it’s those investments throughout the world that are likely to pull us out. Besides, many of the most promising new biological technologies, like stem cell research, are much stronger overseas than they are in the United States.
Use blue chips as the core of your portfolio, especially if you’re starting young. Blue chip stocks, like IBM or GE, besides having lots of initials in their names, are the most rock solid you can buy. Though the value grows more slowly than in many younger stocks, it grows more steadily and surely. Blue chip stocks should be the core of your retirement investing because you’re interested in long-term value, not short-term gains. Even with blue chips, though, make sure you diversify. Companies like AT&T have been damaged by new governmental regulations, and even GM, considered a sure thing for years, was recently downgraded to junk stock.
Read about technology; know what you’re investing in. With all kinds of investing, you can’t expect to make a good decision without understanding the investment. This includes retirement investing. How can you make a rational decision on where nanotechnology is going if you don’t know what nanotechnology is? (it’s a nifty long-term investment possibility, by the way; read up on it.) And how can you expect to make money on inventions if you can’t conceive of how someone’s going to incorporate it into their lives?
If you look back over the last thirty years, you’ll see a technological revolution: computers going from room to micro to mini, scientists creeping ever closer to the secret of curing aging, hundreds of diseases eradicated or turned into nuisances rather than threats. And, doing a little Monday morning quarterbacking, you can point at a dozen things you could have invested in years ago that would be making you a fortune today. That’s what you need to do with your retirement investing: look forward, and try to guess the half-dozen things that will change the world in the same ways thirty years from now..
Don’t invest in the obvious. There’s more money to be made in things like, say, the laser technology used in DVD players than in DVD players. This is because DVDs can be changed a little and manufactured by a hundred companies. Patented laser technology, in contrast, can only be manufactured by the company holding the patent, and can be used in dozens of new products.
Lastly, when looking at retirement investing, remember it’s not all about money. You don’t have to blindly invest wherever you’re going to make the most money; instead, look at the whole picture. If the company’s using child labor, it might be something you should avoid. Just as planning for your retirement involves keeping your body fit enough to enjoy all that free time, your plans for retirement investing should keep in mind those things that may make you regret your actions. Look at the whole picture, and follow your conscience as well as your wallet.