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How The Right Investments Can Successfully Set You Up For Retirement Investing is an important part of your financial health. Moreover, the right investments can set you up for a comfortable retirement. It can also create financial security that can enable...

By Peter Daisyme

This story originally appeared on Due

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Investing is an important part of your financial health. Moreover, the right investments can set you up for a comfortable retirement. It can also create financial security that can enable many other beneficial activities throughout life.

At least, investing can do these things when it's done the right way. The problem is choosing the right options from the endless number of investments available.

Many professionals try to be formulaic and provide their "11 herbs and spices recipe for success." These can be helpful, but at the end of the day, every individual needs to tailor their investment strategy to themselves.

With that in mind, here are a few key investment rules, a list of a few examples of different investment options, and some questions to ask yourself as you select the best investments to set yourself up for retirement.

The Three Objectives of Retirement

When discussing retirement, most goals, takeaways, and activities focus on three fundamental principles:

  • Safety: Investing can provide a sense of financial security.
  • Income: Investing can generate a consistent income.
  • Capital growth: Investing can enhance wealth by buying, retaining, and selling growth assets.

Typically, all investments revolve around these three fundamentals in some form or another. Depending on your strategy and age, one or another of the three may be prominent. It's also important to realize that you can prioritize one over another at different times of your investing timeline.

Different Kinds of Investment Categories

Along with understanding the three fundamental motives behind investing, it's worthwhile to differentiate some of the different categories that most investments can fall under. Most investments are either growth-oriented or defensively-oriented.

Growth Investments

Growth investments are for long-term investing. They aim at accumulating wealth and tend to go through longer up and down trends over time.

Good examples of growth investments include things like shares of stock or owning a property (we define both further down). These tend to have certain elements of higher risk and don't produce dividends. Even so, historically, they tend to grow in value when given enough time.

Defensive Investments

As the name implies, defensive investments tend to play down the risk factor and focus more on safety and generating a consistent income.

Common defensive investments include bonds and cash (again, we define both below). These are more stable investments for retirement that can generate profits, interest, and dividends but don't tend to grow in their inherent value.

Some Common Investment Options

At this point, we've gone over the fundamental aspects of investing: safety, income, and capital growth. We've also broken most investment options into one of two categories: growth and defensive investments.

These are the key building blocks that you can use to make decisions and guide your investment strategy. However, they are only theoretical definitions.

When you go to build an investing strategy and actually put these concepts into practice, you're going to need to do so by committing to actual investment options. Here are a few of the most common ones available to most investors:

High-Yield Savings Accounts

This is a way to invest your cash. Rather than using a checking account, you can set your money aside in a dedicated savings account or similar option where your money can generate a higher rate of return.

This is a good way to keep your cash generating some sort of income. However, it is generally low risk and, thus, low reward.


Bonds are, in essence, when you loan money to another entity. In exchange, you receive your investment back with interest in installments over a pre-appointed period of time.

Bonds can come from multiple places. For instance, both governments and corporations can issue and pay back bonds to those who purchase them.


Stocks are shares of ownership in a company. They give businesses a way to raise funds and, in exchange, anyone with a stock owns a portion of their company.

Two common forms of stocks include growth stocks, which have the potential to increase in value, and dividend stocks, which pay a steady stream of dividends.


Funds are organizations or entities that pool cash from multiple investors and then spread them out across a variety of different stocks. This reduces risk while allowing investors to still own a large variety of stocks.

Dedicated companies run mutual funds. Index funds follow the trajectory of entire market indexes, like the S&P 500. ETFs are exchange-traded funds that also tend to follow indexes.

Real Estate

Buying properties is one of the oldest forms of investment in the history of civilization. By flipping a house, purchasing a rental property, or even simply owning a home, you can tap into the growth power of long-term real estate ownership.

The only problem here is that the barrier to entry for real estate can be high. Fortunately, there are other related options, such as purchasing a REIT (real estate investment trust). This allows you to tap into the income stream of existing real estate assets.

If you want to directly own property but lack the funds, you can also look into tokenized real estate. Innovative companies like RedSwan CRE are fractionalizing commercial real estate ownership, making it possible for individual investors to access multi-million-dollar investment opportunities — which are usually reserved for super-rich investors — for as low as $1,000 dollars. With recent scares in the financial and crypto industries, RedSwan provides a more stable investment option in the crypto world.

Alternative investments

Finally, there is the wide category of alternative investments. This includes all of the things that don't fall under the umbrella of traditional investing.

For instance, cryptocurrency is a good alternative investment when incorporated into retirement in an emotionless and diversified manner (i.e. don't just put all of your money in meme coins). Certain NFT projects also have the potential to appreciate in value over time — although it's important to be very careful since most projects lose value.

Other alternative investment ideas include peer-to-peer lending, investing in collectibles, and even becoming an angel investor or starting your own business.

Questions to Ask When Choosing Investments

As you prepare to create a financial strategy and choose the best investments for yourself, here are a handful of key questions to help you get started (and then stay) on the straight and narrow:

    • Do you have a financial roadmap? This should do everything, from taking into account your current expenses to assessing potential future needs and even scheduling things like rebalancing your portfolio at times down the road.
    • What are your financial goals? Clear, attainable goals are a necessity when laying out your financial roadmap. These should complement your roadmap and help you identify what is "enough" when it comes to your investing success.
    • What is my risk tolerance? All investing involves risk, but how much risk are you willing to take? Remember, risk shouldn't be the only factor. However, the higher your risk is the greater your profit can be.
    • Do I have an emergency fund in place? Going hand in hand with risk potential, an emergency fund is ground zero for safe investing. If you're going to risk your hard-earned money by investing it for the long term, make sure you have a solid rainy day fund ready to bail you out of any short-term difficulties you encounter in the meantime.
    • Can I add to my investments regularly? Saving in lump sums can be effective at times, but if you really want to prepare for retirement, you need to add to your savings on a consistent basis. This also allows you to tap into the power of dollar-cost averaging, which spreads out your risk.

Additional Questions to Ask:

  • What are my unique circumstances? Are there any elements of your situation — like the fact that you're starting a family or working as a contractor with fluctuating income — that will impact how you prepare for retirement and investing, in particular?
  • How old am I? Your age plays a major role in how you invest. For instance, if you're in your 20s, you should probably focus on high-risk securities, like stocks. Once you're in your 60s, though, the ratio of stocks and bonds should be closer to even.
  • Are my investments (or future investments) diversified? Diversification is a critical element of any investment portfolio. Just because you like a particular investment option doesn't mean you should overly invest in that area. Make sure to assess how balanced your portfolio is on a regular basis.
  • Can you access professional help? Finally, is it possible to get the help of a professional as you plan things out? This could be a service provided by your employer or it could be going through a third-party financial expert. Either way, this can help you maximize your investments as early as possible.

From grasping basic investing principles to asking the right questions to understanding your options, there are many ways that you can make sure you're choosing the right investments for your retirement. The important thing is that you take the time to prepare. Lay the groundwork now so that you can make wise decisions right from the beginning as you prepare for a comfortable retirement that meets all of your financial needs.

The post How The Right Investments Can Successfully Set You Up For Retirement appeared first on Due.

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