3 Tips for Successful Retirement Investing

When planning for retirement, it is important to know all of your options. It’s also extremely important to model the behaviors of those who plan and invest in their retirement successfully, traits such as keeping your emotions out of decision making and diversifying your investments.  Most retirement investing advice is focused on the tactics, formulas and strategies, but sometimes it's helpful to take a step back and look at the big picture before jumping into the tactics.

We put together 3 tips you should consider when planning for a successful retirement.

Understand Your Retirement Investment Options

The first step in planning out a successful retirement is to educate yourself on the options available to you regarding different account types. In short, you essentially have two main account types as options, tax-advantaged and taxable accounts. Some may be provided to you by your company, while others are available through a brokerage business or bank. Also, remember that accounts, such as 401(k) plans, individual retirement accounts (IRAs), and brokerage accounts, are not investments in and of themselves. Instead, they are portfolios that contain the investments you select. 

Now let’s take a look at the differences between the two account types.

• Taxable Accounts- Taxable accounts do not receive any type of tax reduction. They are supported with after-tax monies, so you do not receive a tax deduction when you make a deposit. In addition, you must pay taxes on any investment income or capital gains (from the sale of an investment at a profit) in the year you receive them. The majority of "ordinary" brokerage or bank accounts are taxed. However, you can keep a tax-deferred account, such as an IRA, with a brokerage.
• Tax-Advantage Accounts - Accounts can be tax-advantaged in a variety of ways. 401(k)s and IRAs are tax-deferred accounts, which means you don't have to pay taxes on the gains generated by the investments included inside them each year. Only the money you withdraw during retirement is subject to income tax.

Conventional IRAs and traditional 401(k)s are financed with pre tax monies, which means you get a tax benefit for the deposits you make in the year you make them. Roth 401(k)s and Roth IRAs, on the other hand, are financed using after-tax money; you cannot deduct the amount you deposit at the time. However, any withdrawals you make from these funds in retirement are tax-free.

When Investing, Keep Your Emotions in Check

This is in most cases the biggest problem investors have when it comes to successfully growing wealth. Emotions can make long-term wealth accumulation very difficult regardless of which emotion, if it’s strong and used in the investment process, it’s probably a bad idea. Overconfidence sabotages potential gains, and fear causes you to sell (or not acquire) investments that may increase.

Focus on utilizing these 3 strategies to keep your emotions in check when investing for retirement.

• Stay Calm. Keeping track of your victories and losses will help moderate your emotions and put everything into a more balanced perspective. Rather than reacting, take the time to consider your historic performance over a period of years. You'll make wiser choices in the future.
• Be realistic. Not every investment will be a winner every time and not every stock will grow as your grandparents’ blue-chip stocks did. But some will, so having faith that some level of growth will take place is what you can focus on. Insanely high returns are not the reality for most investors.
• Maintain a balanced portfolio. Diversify in a way that makes sense for your age, risk tolerance, and goals. As your risk tolerance and goals vary, you should rebalance your portfolio on a regular basis. Most younger investors have decades to recover from any market downturn, which allows them to focus on higher-risk/higher-reward assets such as individual equities. Those nearing retirement, on the other hand, have less time to recover from losses; as a result, older adults often move their portfolios toward a bigger percentage of lower-risk/lower-reward assets, such as bonds.

Diversify Your Retirement Portfolio With Private Equity Investments

With the 2022 market volatility caused by the epidemic and other global events, diversifying your portfolio is becoming increasingly vital. Did you realize you could incorporate private equity investments (also known as private placements) into your retirement plan? Private equity funding allows investors to invest directly in private enterprises or in funds that do so. This gives investors shares in non-publicly traded firms, whereas equity investment provides corporations with funds for research, equipment, marketing, or human resources. Private equity finance, like any other sort of investment, includes risk, but it also offers the potential for tremendous profit.

If you are looking for a successful way to invest in your retirement then contact us to learn more about what options you have based on your current situation. Our private equity group and professional investment advisors are focused on tailoring strategies for investors like you to grow wealth and retire comfortably.