Investment Strategies for Seniors

December 21, 2014

When it comes to investing, we tend to focus on retirement as a goal; but the seniors in our lives who are past retirement have investment needs too, and those needs can vary, depending on their financial situation. Some have enough to live comfortably, but want to accelerate the inheritance they’ll be leaving for loved ones; others have managed to retire but still could benefit from some short-term added income.

There’s no one-size-fits-all, that’s for sure, and the stakes can be high. Ideally, if mom or dad could use some guidance, consider bringing them to a financial advisor with expertise in post-retirement investing. There are also excellent websites that offer a lot of helpful information to get you started (several of them are linked to here, and we’ll list them again at the end). Here are some jumping off points to think about – some traditional, some more outside the box:

Stocks, Bonds, and Cash: The mix of these three classes is often referred to as someone’s asset allocation and the right mix of these changes over time, depending on one’s financial situation. Generally speaking, stocks being volatile in the short-term are higher risk post-retirement than cash or cash equivalents, which carry almost no risk but also the least reward.

Residential and Commercial Property: As long as you’re looking in a strong location, investing in property is usually considered a smart move – and can even bring short-term gain in a hot market where residential properties can be flipped in a tight time frame. But for those not necessarily wanting to take on the financial liability or responsibility of owning a property, a Real Estate Investment Trust or REIT, can be an attractive option. REITS are essentially corporations that own and manage a portfolio of properties and mortgages. Anyone can buy shares in a publicly-traded REIT without the headaches or expense of being a landlord.

Investing in Family Members: Loaning money to family members is tax-free, provided you’re not charging them interest, and can be mutually-beneficial in the right situation. A reliable family member needing cash to purchase a home, for example, achieves that goal while giving the loaner a low-risk shelter for income that can be collected later on. Obviously you’d want to do proper due diligence and make arrangements under advice of legal counsel.

Collectables: For seniors in solid financial shape who want a break from the complications of market-driven investments, turning to collectibles can be a lot of fun. But knowing the market can be tricky, and considerations like storage space and insurance come into play. We found an excellent guide to the collectables market that covers all the basics, published by the Wall Street Journal:

Here are the financial websites we linked to above, plus some other excellent resources for seniors looking to invest: