What Are the Best Investments for Retirement? The Financial Gurus Answer

The best investments for retirement.
The best investments for retirement.

The importance of saving up for retirement goes without saying, but sometimes the task can seem daunting. You need the discipline to set aside money every month, but you also need to know how to invest it.  Luckily, there are financial experts available who can offer sound advice when it comes to retirement investments.

While there should be major differences in how you invest for retirement when you are young verses how you invest as you grow older, here are some tips from three well-respected financial gurus who have answers to your retirement investing questions.

Suze Orman

According to the queen of personal financing, good quality stocks and exchange-traded funds (ETFs) that pay out a dividend are smart investments. Dividend-paying stocks and ETFs are those that pay investors a portion of the profits that companies realize. Dividends are paid regularly to stock holders. Companies may pay dividend payouts quarterly, monthly semi-annually or annually, and the amount that companies pay in dividends is expressed as a percentage of the stock price.

If a company consistently pays out dividends with a fairly stable yield, this may indicate that the company has solid profits year after year. Investors will receive an income stream much like a regular pay-check from their employer, in addition to any profits made should the stock price increase.

“There are many many good quality individual stocks, whether they’re stocks or exchange traded funds that are paying a 5 or 6% dividend yield,” Suze stated in a recent interview on MarloThomas.com. “If you’re needing income from these investments, you care about the income more than you do the principal. If you invest in something that has a solid dividend, they’re not going to take it away from you. You know you’re going to get that dividend, whether the stock is at $30 or the stock is at $40 or the stock is at $20.”

Dave Ramsey

Mutual funds are ideal investments to make for those looking to grow their retirement fund, according to financial guru Dave Ramsey.

Ramsey recently spoke about his advice on retirement investing on 100 Huntley Street. “What I use are growth stock mutual funds with long track records. I spread it across four types: growth and income, aggressive growth, international and a regular growth fund,” he said. These types of funds invest in young companies in rapidly-expanding industries, which also experience impressive year-on-year earnings growth and consistent growth in the number of employees. They usually operate in dynamic economic sectors, such as pharmaceuticals, technology, and international financial services.

Investments for retirement
How should I invest for retirement?

Ramsey also recommends investing 15 percent out of every pay-check into a Roth IRA and pre-tax retirement accounts. While you might not always be able to save 15 percent every pay-check, Ramsey reminds that, for instance, saving 12 percent on average on a $70,000 household income will yield $1.6 million by the time retirement years arrive.

Ben Stein

The former “Win Ben Stein’s Money” host warns that most Americans have saved too little by the time their retirement years roll around. “Your main liability is providing for yourself after you retire. That’s your primary liability, and that is an enormous liability. And very few people make adequate provision for it,” he said. “It used to be that was handled by pensions. It isn’t handled by pensions for many Americans now, unless they’re civil servants, and so people have to make a very substantial provision.”

Having said that, Stein recommends Americans invest in stocks in order to realize enough growth that will be sufficient for retirement.

However, Stein does not recommend investing in individual stocks, “unless your last name is Buffett.” Instead, while stocks are smart investment channels, he recommends investing in broad indexes, such as S&P Global BMI and SPDRs. “There are various specific indexes that emphasize high dividend-paying stocks, low beta stocks,” Stein said.

The Best Retirement Investment is Dependent on Your Own Situation

Where you invest your money, how much you invest, and when you start investing can make a huge impact on your retirement fund.  However, the investments that are right for you and your situation will be dependent on your age, your current financial situation, the other assets you have, current and future income sources and your goals.  A retirement calculator can guide you with knowing how much you need for retirement, but you might want to follow the advice of an experienced financial expert who can guide you toward the right investments for your specific financial situation.

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