Bill Gerhard: Hi! I'm Bill Gerhard, Director of Financial Services for AAA. I'm talking about how to save for retirement using IRAs.
Let's look at the issue of IRA Investment Allocations, how your money is invested within the IRA. All IRAs offer an opportunity to save for retirement, however, all IRAs are not created equal, nor should they be. An investor of 25 has very different perspective, than an investor of 55. The majority of IRAs are Portfolio that can include Stocks, Bonds, Mutual Funds, Bank CDs and Money Markets for example.
Some Self-Directed IRAs even include an investment in Real Estate or Precious Metals. Diversifying your holdings also known as allocations, helps protect you from the shifts in the market or stocks that go self. As you make decisions about allocating assets, you need to consider your financial goals and your comfort level with risk. Are you saving for something that is more than your term than retirement, such as buying a house or paying for college?
You might consider Money Market, Government-backed bonds and Bonds issued by financially secured corporations. Talk with the financial professional to see which options meet your risk, and return requirements, are you focused on optimizing your retirement income, are you retiring soon? Blue chip stocks with a proven history of paying continuous dividends maybe an option to discuss with your financial advisor.
If you want Long-Term growth in income, you want a balanced portfolio; this could potentially include a mix of common stocks and leading corporations that pay cash dividends, Medium-Term investments such as bond funds with fixed income and maybe real estate holdings. Again, these options are something to explore with the financial advisor.
If for time in its decades away, you might be comfortable with more risks, because you have a longer time to grow your investments and rebound your portfolio as needed. A Growth-Oriented Portfolio typically includes common stocks that may not pay dividends, but have strong prospects for long term success. Profits and stock price appreciation, your financial advisor can help you identify some options.
AAA offers you information in this video series for educational purposes only. Carefully consider objectives, risks, expenses and tax implications before investing.
In our next video we'll review IRA withdrawals, rules and penalties.