There has been a substantial amount of investment losses for those who retire due to continued volatility of equity markets. This has resulted in a large part of the senior population seeking alternatives that are more stable for investment portfolios.
Luckily, several choices are available for those that need both income and growth they can depend on during their later years.
#1 Fixed annuities
Fixed annuities are contacts where the insurance carrier guarantees the principal and interest. They are commonly backed by reinsurance policies, in case where the carrier may become insolvent.
Additionally, they often pay a little higher rate than CDs. The rates for fixed annuities are likely to increase in the following years, which makes them that much more attractive. You should look into more on the pros and cons of annuities to see how they can work for you.
#2 Variable annuities with a guaranteed income riders
For people that invested in variable annuity contracts, guaranteed income riders can make things less stressful. These are available at most carriers now and help assure that the guaranteed amount is paid, commonly on a monthly basis, no matter the performance of underlying subaccounts.
Although, there are certain conditions that apply, such as an inability to withdraw a large lump-sum with the contract. Also, the contract may need to be annuitized prior to starting payments, thus payments only start once the contract has been converted to annuity units, which makes it an irreversible schedule.
This is a tried and true method to guarantee a steady interest and principal. Since interest rates are currently at an all-time low, it is a great time for developing a laddered portfolio with CDs which allow for reinvesting each of the CDs upon maturity when interest rates start to increase.
Additionally, the FDIC insurance covers up to $250,000 per account, which allows investors to put more money in a single CD.
#4 Private lending
The Subprime Meltdown of 2008 made it very challenging to qualify for a house purchase. Thus, the market opened up to private lenders that are able to offer funding to prospective borrowers that can’t qualify for the loan at a bank or a traditional lender.
Private lenders often earn a higher return rate compared to CDs or alternative guaranteed methods with a minimal risk level, when precautions are taken properly.
#5 Utility stocks
Without clean water or energy, modern civilization will not able to function, which translates into investors earning a consistent income. Shareholders have been paid steady dividends from utilities for decades, which is a trend that is not expected to end anytime soon.
The stock prices for utilities have maintained at a rather stable rate over time, making it a good option for conservative investors that are looking for additional income.
#6 Preferred stocks
These resemble utility stocks as they pay out a high dividend, while remaining stable. Additionally, the preferred stocks offer more safety for the investor as they precede common stock during a reimbursement process in the event of a company liquidating.
#7 Corporate bonds
This option is not guaranteed by the United States government, but pays a higher interest rate than Uncle Sam. These are relatively secure in most situations, but safety of notes depends on the financial stability of the issuer. However, any investment grade bond that is rated BBB or above can be a safe bet in most cases.
The methods on this list are only some of the options available to those needing consistent income. Some may help with growth, while others simply supplement the income.
Still looking for more? Feel free to check out our comprehensive personal finance guide to learn more about managing your budget and staying financially healthy.