Investing for retirement used to be an easier game. You simply had your 401K deductions drawn from your paycheck and you relied on that and social security to get you through your twilight years. These days it’s a different story. People are living longer and prices are going up. Young adults in their twenties are starting to open compound interest accounts like Roth IRAs and develop investment portfolios in preparation for retirement. And the baby boomers, many now into their retirement age range, are beginning to realize that their best laid plans may not have been enough, especially with the recession and other factors wreaking havoc on all manner of investment accounts. The result is that many in this generation are looking at working for several more years in order to maintain the lifestyle to which they have become accustomed, unless they can come up with a smart investment plan that looks to pay off more quickly. If you happen to find yourself in this boat, here are a few investment options for 2013 that may just be the ticket to earlier retirement.
- Green energy. Purchasing stocks is always a risky proposition, especially in a recession, but when included in a diverse portfolio, a few higher-risk options are common. And if you’re looking for something that’s likely to pay off sooner rather than later, green tech may be the way to go. With the current administration strongly in support of green energy initiatives, growth in this sector has flourished. This may not be so in another four years, however, so now is a good time to think about jumping aboard the clean energy bandwagon. Just keep monumental missteps like Solyndra in mind when selecting a company to support. Just Energy Group Inc. (JE) has been listed by experts as one to watch this year.
- Self-directed IRA. This isn’t an option that a lot of people consider, mainly because it requires them to decide how their own funds are invested. Generally speaking, your Roth IRA is funneled into some sort of mutual fund for safety’s sake. But if you would like to choose your own investments in order to potentially maximize profits, this option allows you to take the reins. The reason that most people choose to self-direct their IRA, however, is because they want to invest it in a fledgling company. In some cases they hold a stake in the company (although this option does not allow for majority ownership) or the company is owned by family or friends. Either way, you can use this option to change up your investment strategy, help a new business get off the ground, and potentially make your money work very hard indeed (if the company grows and is sold for a major profit, you could get not only your investment back, but also a percentage of proceeds from sale).
- Gold. This pretty piece of metal may have its ups and downs, but it always seems to bounce back eventually. Since it has lately had something of a downturn, it’s definitely one to keep an eye on in the coming months.
- Business Development Companies. In case you hadn’t noticed, bank loans are a little hard to secure these days, and mid-level companies are suffering. Luckily, BDCs have swooped in to offer the funds these companies need to stay in business. The money comes from investors like you and goes to companies with assets that can be easily liquidated. In most cases, investors receive decent dividends from the loan payments (and interest) and more can be generated through mergers and sales.
- Property. You might not be able to sell your house right now because of bargain-basement prices, but you can certainly use this state of affairs to your advantage when it comes to investing. Of course, you’re no more likely to gamble your money on flipping houses than you are to play stock market games with your money on E-trade. For this reason, you should consider a passive income property like a duplex that will pay for itself (and then some) through renters. Or you might join an investment group (REIT, or Real Estate Investment Trust) that holds several properties (residential or commercial) at a time and splits returns.