Financial Answer Center
- How Is Investing for Retirement Different from Other Investing?
- Your Retirement Investment Goal
- Investment Return
- Understanding Risk
- Individual Stocks
- Mutual Funds
- Diversification
- Asset Allocation
It is not. Any investment program needs to consider the rate of return, your risk tolerance, and your time horizon. Young people investing for retirement have a long-term time horizon. Investing in stock mutual funds makes sense. When you are age 50 and above and closer to retirement, more conservative investments such as bonds and cash may be more appropriate.
The process you go through in investing for retirement is the same as investing for other purposes. What is your goal? What do you have to work with? When will you need the money? Getting clear about your goals always eliminates unwanted or unnecessary alternatives.
When managing your investments, you will need to understand risk, which comes in different forms. You will also need to understand the different challenges and rewards of investing in individual stocks or mutual funds. Given the ups and downs of the market, diversification is an essential part of any investment strategy. And you should know where to go to evaluate the performance of your investments.
