- How Is Investing for Retirement Different from Other Investing?
- Your Retirement Investment Goal
- Investment Return
- Understanding Risk
- Individual Stocks
- Mutual Funds
- Diversification
- Asset Allocation
When you work on your retirement investment strategy, one of the key issues is the rate of return you expect to earn on your money. Historically, different investments or asset classes have achieved different rates of return over different time periods. When you compare the returns on common stocks, bonds and cash, common stocks have had the highest rate of return over a long period of time. Cash and cash alternatives, which provide safety of principal and pay interest, have provided the lowest long-term rates of return. If your risk tolerance is low, you'll need to assume a relatively low rate of return on your investment when you do your planning. Likewise, if your risk tolerance is higher and you have a long-term time horizon, investing in common stocks or stock mutual funds will allow you to assume a higher rate of return for planning purposes. But remember, a higher rate of return does not come without some risk.
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Financial Learning Center content created by TrueBridge, Inc. The information provided is based upon sources and data believed to be accurate and reliable. The content contained herein is intended for information and illustrative purposes only, should not in any way be construed as a personal recommendation, and should be used in conjunction with individual professional advice.
