Purchase Structured Settlement

By: Jared Cruse.

The one thing that can take away your confidence and your desire to invest, is risk. When your retirement increases you are looking forward to sandy beaches and tea with friends. When the retirement account dips you can not help but feel stuck in the job you have now. The feeling can become overwhelming and often people will resort to making only the most secure of investments, like CD's. This often guarantees a very slow, yet steady climb to financial independence. Its not all that necessary to exchange the safe for the quick you just need a course in investment diversification.

Most of your faster growing retirement income should be placed in growth tax differed stock accounts. In the long run the increase is unequaled. You should always take advantage of a employer matched 401k account as well, in fact that should be first. For most people who started at the right age matching the 401k is plenty of retirement income when that time arrives. The down side to maxing out these accounts is the tax difference, the tax on a 401k is considered income tax whereas the tax on a mutual fund outside the 401k is capital gains only.

When a good buying opportunity arises you need to be in a position to take advantage. For instance if the market goes sky hihg again with interest rates north of 10% you may want to add up to 25% of the portfolio to long term bonds. In the future when 30 year bills become very valuable when interest rates return to normal.

By far the best investment your money will get is from the equity in your house. Before you retire it is very important to make sure the home is paid for in full. If you are on track to pay off the home completely you will be less likely to make overly aggressive moves with your investment choices. In order to hedge certain market risks you never want the debt in your real estate investing to exceed 1/3 of your total retirement account.

I myself have often used settlement based annuities to diversify my future income stream. There is a decent amount of opinions when it comes to settlement annuities, they tend to cost more and you sign away some normally enjoyed investment freedom for some secured future income. The gains you sacrifice now in favor a secured income may not be super high in the way of returns, but they are super secure in the money they put out. The purchase of a structured settlement will only be beneficial if you total out all your expenses and purchase an annuity that pays out that amount.

Article Source: http://yourfinance.co.za

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