Hi everyone, I have plans of retiring the next month. I have gathered up some income for the retirement period but I was keen on knowing the best ways of investing money during retirement. I know that are a lot of ways to invest as I have been watching on TV and hearing about them in the newspapers….but are these all beneficial??? What are the best among the various ways for investing……please throw some light on this.
We need some more info about you to be able to give good advice. Here’s some stuff in general.
Roth IRA - Your after tax money goes into an account where you can buy things like mutual funds for your retirement. Your gains are not taxed when you take them out at retirement. Can’t touch it without paying penalties before age 59 1/2. Must start taking some distributions by age 70. This year, you can contribute $5,000 max. into the IRA. If you are married, you can open up another IRA for your spouse with the same stipulations.
Standard IRA - This is pretax income going into this. Same general numbers as for the Roth IRA. Big difference here is that you pay tax on your gains when you withdraw your money.
Stocks - Can invest and trade. You pay short term capital gains for anything held under 1 year and long term capital gains for anything over a year.
Mutual funds - Can purchase and hold mutual funds (not in an IRA) and have access to the money at any time. Same capital gains rules as stocks listed above.
Rental properties - If you get the right property (which means buying it right), you can have the rent pay all of your expenses and some profit left over too. Over time, your tenants’ rent will pay off the mortgage and you’ll own a property you can either keep renting or sell. Make sure to educate yourself using books and experienced investors on this board and elsewhere so you are armed with as much information about the business as possible. Takes money to get into as well as you need reserves for when something inevitably goes wrong.
Rehabbing (commonly referred to as flipping on TV) - Buy a house that needs work. Fix it. Try to sell for a profit. Viewed by the IRS as a “dealer” in real estate. Capital gains taxed on your profits.
You’ll have to take all the available information for your situation and make the decision as to what you think would be most beneficial for you. You may have no desire to be a landlord and do rentals, or trade stocks, etc.
Don’t pay attention to the late night informercials. Those things cater to people who don’t have jobs at all (or good jobs) and are looking to get rich quick. There’s always stories of people who can do that, but for the vast majority of us, it takes hard work and dedication for success.