Investing requires understanding your goals.
How should you invest your money?
Should you invest in a house? A business?
How should you invest your important money? An IRA? Stocks and bonds?
The answer is quite simple if you can answer just one question.
“What is the purpose of your money, and what do you want it to accomplish?”
Most people can’t answer that question immediately. The reason is simple; it is a tricky question to answer. The answer is dependent on the goals of the person asking the question. The funds could be for a new car, a vacation home, retirement, or education.
Should you invest in an annuity?
I believe that the basis of all long-term investing that concerns funds for retirement should be in something safe, secure, and free of risk. Also, I think a portion of your long-term retirement funds should have some risk. With risk comes the possibility of gain; the gain can help offset inflation and add to the retirement pot.
My father didn’t invest in the stock market; he kept his money in the bank. Did he make a mistake being so conservative? Did it cost him money in the long term by not investing more aggressively? No, he didn’t lose money by investing in banks; he lost the “opportunity” to make more money. That was his downside; he lost an opportunity, but he didn’t lose his money; it was still safe and secure.
Consider a plan that includes an annuity as your choice for your safe and secure funds for a straightforward reason. Insurance companies who provide annuities do not care how long you live, and they will accept the responsibility of providing you income, the income you cannot ever outlive, regardless of how long you live.
Once your base is in place, add investments that can have some risk and more substantial rewards. Then as you age and get closer to retirement time, slowly convert your risk investments to the safe and secure side, the annuity side — a simple and straightforward approach to managing your retirement plan.
