In your post-work years, it makes sense to choose safe and smart investments. The steady income is long gone, after all, and the expenses keep pouring in. Below are some ideas where to put your retirement cash with a little less risk compared to a volatile stock market.
- Municipal bonds
Two advantages make municipal bonds attractive: the interest you earn is free of federal income taxes and state and local taxes may also be free if you live in the state that issued them. Just be mindful not to put too much money on municipal bonds or you may end up paying more taxes.
If you cannot be asked to deal with the vagaries of the stock market, invest in annuities. There are different types to choose from. Some annuities take the form of certificate of deposits from insurance companies while others look like payments from a pension plan. They are among the safer investments to make in retirement with only a few drawbacks.
- Real estate
The most attractive investment for retirees is rental real estate. You can either purchase a rental home or rent space in your house like a spare room or apartment. This will provide you a reliable income for years if you are prepared to take on the life of a landlord.
- Treasury inflation-protected securities
The government has been spending trillions in an attempt to stimulate the economy amid the coronavirus pandemic. Most investors are worried how this will affect inflation but you will continue to sleep well at night if you invested in Treasury inflation-protected securities. These instruments are like normal bonds in interest but the principal adjust to cover inflation. In short, no matter how bad inflation gets, you should keep pace or be very close to it.
- Peer-to-peer lending
You probably heard of peer-to-peer lending in the past years and you can easily become a part of this world by signing up to peer-to-peer lending websites. Here, you agree to fnd a loan and you are paid in cash based on the loan’s interest rate. Of course, there is a risk of the borrower defaulting but this form of lending remains relatively safe but it is not a guaranteed way to earn cash. Keep your eyes open.