With the average life expectancy of seniors increasing all the time, it's more important than ever to ensure you remain financially stable in your retirement years.
One of the best ways to do this is through investments that will generate significant income and gain appreciation.
While there is no guarantee this will happen—all investments carry a degree of risk—there are some things you can do to increase your chances of receiving a positive return on your outlay.
In this post, we’ll examine some of the considerations seniors need to make before committing to an investment. If you take into account these factors, you will give yourself a better chance of making some decent money.
Why are you investing?
The first thing to consider is why you are investing because this will shape all other decisions you make.
As a senior, there are several reasons you might want to invest, which may include everything from the desire to generate additional income streams in your retirement to wanting to help secure the financial future of your grandchildren.
Therefore, before committing any money, take a moment to fully understand the purpose for doing so.
How much do you want to make and when?
Knowing why you want to invest is one thing, but understanding what you hope to achieve by doing so is entirely different.
As investments can be volatile, it is important to have an idea of what kind of return you are looking to make on them. This will help you formulate an exit strategy.
How much you want to make can be identified in monetary or percentage terms. Either way, it will give you a good marker of what you want to achieve.
How much to invest?
The more money you invest, the more money you can potentially make. So, it is important to know your financial limitations.
Knowing that every investment comes with risk, you should only outlay what you would be at peace with losing should the worst come to the worst.
You should also determine if this investment will be a one-off sum or on a regular basis that takes advantage of dollar cost averaging.
What is your level of risk?
Something else you will need to determine before you invest is what level of risk you are prepared to take. Doing this will provide you with some guidance as to what you should invest in.
For instance, if you are a gambler by nature, you might be prepared to make an investment that involves risking more money for potentially higher gains.
Alternatively, if you feel like you have worked hard for your savings and you want to take a more cautious approach, you might choose something that offers a less risky proposition.
What are the tax implications of investing?
Depending on how much you invest, there may be tax implications involved.
Subsequently, it is worth consulting with a qualified accountant who can provide detailed and relevant professional advice on the matter as per your individual situation.
Where to invest?
Once you have answered all of these questions, the next thing to do is determine what type of investments you will make.
You have several options available to you, including investing in real estate or small businesses through crowdfunding or as an angel investor.
Additionally, if you are under the age of 74, you can top up your superannuation and, of course, buy shares.
Should you do the latter, you might decide to gear your financial backing toward an established company like Telstra, which has a good track record of performing well on the stock market. You can check out the current Telstra stock price here.
Alternatively, you could invest in a start-up company that could generate significant gains if it does well over time.
What happens to your investments if you die?
While it’s a bit of a macabre thought, you will need to consider arrangements for the transfer of your investments to other people in the case of your death.
The best way to do this is by making a will, which you would be recommended to enlist the services of a lawyer to help you draw up.
If you do not have a will set up, your investments and assets will be managed through a distinct legal process.
Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial, investment, or trading advice. The stock market is inherently risky, and past performance is not indicative of future results. The author and publisher of this article are not registered financial advisors and are not responsible for any losses or gains resulting from investment decisions based on this content. Readers are encouraged to conduct their own research and consult with a qualified financial advisor before making any investment decisions. All investments carry risk, and you should never invest more than you can afford to lose.