When it comes to retirement, men seem to have more advantages than women. They are more likely to retire later, which means they will have more time to increase their savings. They also tend to earn more, so they can contribute more.
These benefits, though, disappear when men don’t know where to place their money. For those who are still confused about what investment to make, here are three great choices:
1. Retirement Accounts
One of the simplest ways to raise funds for retirement is to open or contribute to an individual retirement account. The United States offers at least four:
A traditional IRA offers tax deferral on contributions. This means that you will not pay taxes until you withdraw money from the account.
Taxes on investment gains and dividends are not deferred, but taxes on contributions might be deductible depending on your income level and whether you or your spouse has a retirement plan at work. Withdrawals from traditional IRAs before age 59 1/2 are subject to a 10% penalty.
A Roth IRA is similar to a traditional IRA but is funded with after-tax money. Thus, contributions are not deductible, and you will pay taxes on the amount that you contribute. Withdrawals of earnings (but not contributions) made before age 59 1/2 are subject to a 10% penalty.
Simplified Employee Pension (SEP)
A SEP is set up by an employer and allows employees to contribute a portion of their salary on a tax-deferred basis, which is invested in stocks or bonds. The money can be invested until it’s withdrawn at the employer’s discretion.
Savings Incentive Match Plan for Employees (SIMPLE)
A SIMPLE IRA is set up by employers with 100 or fewer employees who earn at least $5,000. Employees can defer a portion of their salary into the plan, and their employer must match it with tax-deferred contributions. The combined contribution limit is $13,500 for 2020 and 2021.
2. Property Investing
For many years, people have been looking at property investment as an attractive option for making money. Property investors can gain value through rent or capital growth, which prolongs the benefits of being a landlord.
The real estate investment industry has also grown over the last decade, with more developers and investors interested in the sector. With the right plans, property investment is an excellent method for growing your wealth and assets for retirement.
There are a couple of reasons to consider becoming a landlord:
- It’s nice to have an extra income stream, especially if you can get a long-term tenant to pay rent on time and stay for an extended period.
- If you can negotiate a good deal for letting your property, then the rental income will certainly offset the costs of owning it.
- You can invest in various properties, including houses, units, warehouses, and commercial buildings.
If you want to invest in property, there are several ways to tap into the real estate market. Some people buy and sell properties as their primary source of income, while others rent out their investment properties to cover costs or even make a profit. An apartment management and investment company invites potential investors to own a rental without spending on renovations.
These are well-chosen properties, sometimes distressed units that underwent a significant overhaul. In other words, they are likely to be in a strategic location with amenities and features that are attractive to the target market.
3. Diversified Investment Funds
The term “investment fund” refers to pools of money collected from multiple sources that are used by people who do not have enough capital on their own to buy all the shares in a company they wish to purchase.
Investment funds fall into two categories: public and private. Public funds are typically larger, with hundreds or even thousands of individual contributors. They can be traded on exchanges like the New York Stock Exchange (NYSE). But people without large amounts of cash don’t normally buy into them.
Private funds, such as venture capital or hedge funds, make much smaller investments in much larger companies. They might invest in a company that is not yet incorporated or traded on exchanges.
That company will typically have only one owner or co-owner who controls all the shares. People who work for these companies usually have to have special access to these funds, like large sums of cash to contribute or connections to the fund owner.
Either way, the primary goal of investment funds is diversity. It significantly reduces the risks of quickly losing your money and allows you to match your investment with your risk tolerance or appetite.
When it comes to general investing, the general rule of thumb is to do it as soon as possible. The best time is when you’re in your twenties or early thirties: you will have a lot more time to recover if you falter.
But even if you are late to the party, you can still take advantage of investing. One, it’s a lot better than having nothing when you retire. Two, it remains the fastest way to boost your money.