Retirement Planning Through The Use Of IRAs, Stocks, Mutual Funds, Bonds And Annuities

Posted on

There are a number of ways you can save towards your retirement, and the more diverse your portfolio is, the more stable your investments will be. Whether you purchase IRAs, which have a yearly limit on the amount you can invest, stocks, bonds, or annuities, investing in your future is essential to having a comfortable retirement. When you are ready to begin planning your retirement, it will be beneficial to you if you sit down and meet with a financial planner.

Traditional Vs. ROTH IRAs for Your Retirement

When you invest in a traditional IRA, the money you place into your IRA is tax deductible, up to certain limits every year. Money placed into a ROTH IRA is not tax deductible, so there are no limits to the amount of money you put into the IRA every year. When you begin receiving distributions from your IRA, a traditional IRAs distribution will count as income while money you receive from your ROTH IRA will not count as income. Both the traditional IRA and the ROTH IRA are basically a reverse plan of the other one.

Stock and Mutual Fund Investing for Your Portfolio

You can purchase stocks and mutual funds through a brokerage firm, or on the internet through an online brokerage company. You can decide if you want to invest in low risk options, or high risk, or a combination of the two. It's also important to understand that you can invest heavily in the stock market, or you can simply purchase a few stocks to see how they add to your investment portfolio. Whatever you choose, there is no limit to the amount of stocks or mutual funds you can buy every year. When you cash out stocks or mutual funds, the money you earned above your initial investment is considered income.

Purchasing Bonds and Annuities for Your Retirement

Government bonds are an investment that has lost popularity over the years. The way bonds work is, you purchase a bond with a face value of $100, spending $50 on the bond itself. When the bond matures, you can cash your bond out for the face value. The problem with purchasing bonds is the length of time it takes for bonds to mature. For example, EE bonds take 20 years to reach face value at this time.

Annuities are a form of insurance that you can purchase for your retirement. They are a solid investment, and you can choose an annuity that pays out monthly, quarterly, once a year or even a lump sum payment. Annuities come in a variety of options, so it's important to talk with your financial planner if you want to invest in an annuity.