When you reach retirement age, you automatically start getting cautious about your investments. You would start favoring the safe investments like bank deposits and try to distance yourself from risky options like shares and ETFs. While you cannot disagree that ETFs have an element of risk in them, it is also true that they are capable of providing great returns in the long term. Hence, analysts recommend that you must invest a portion of your sum in these exchange-traded funds so that you can reap good profits after a few years. There are a few funds that cater exclusively to the needs of retired investors. Read on to know more.
Exposure to global giants
If you want your investment to give out great returns within five years of investing, you must try out the Vanguard Total World Stock ETF (VT, Financial). As the name indicates, this fund invests your money in some of the world’s best stocks like Apple (AAPL, Financial), Nestle (NSRGF, Financial), Toyota Motors (TM, Financial), ExxonMobil Corporation (XOM, Financial), Johnson & Johnson (JNJ, Financial) and Wells Fargo (WFC, Financial). One of the highlights of this fund is that it holds a whopping 7,000 stocks belonging to various industries. This diversity will stand you in good stead in the future. All stocks held in this fund are global leaders and are from different economies. Hence as the global economy witnesses a reasonable growth, this fund also grows proportionately. Currently the dividend yield of this fund is 2.3% and the annual fee that you need to pay to invest in this fund is a meagre 0.18%. It is indeed a great opportunity for retired investors to get exposed to some of the best stocks in the world at such a low fee. The price movement of the fund is seen below:
Apt for the conservative investors
Almost all retired investors are conservative when it comes to choosing their investment choices. However if you are extremely conservative but still want more returns on your investment than what bonds and deposits give you, the most apt ETF for you is the Vanguard Dividend Appreciation ETF (VIG, Financial). This fund enjoys a great reputation among the investors because of the prudent choices of stocks that it holds. This fund does not choose stocks that pay high rates of dividend; it chooses stocks that pay consistent dividends. Stocks that pay very high rates of dividend have a significant amount of risk associated with them. Hence the fund only chooses those stocks that have a financial regularity and pay out consistent returns to its investors irrespective of the volatile condition of the stock market, thereby perfectly catering to the needs of the highly conservative investors. Trend of price movement of this fund is seen below:
Treasury back in vogue
Gone are the days when treasury bonds were considered bad choices of investing as they were highly affected by the recession of 2008. Now with the US economy growing at a healthy rate, treasury bonds are back with a bang. For investors who are looking for great options to invest in these bonds, iShares Treasury Inflation Bond ETF (TIP, Financial) is a great option. The worth of U.S. treasury bonds that are held in this fund increases proportionately with the economic development. In the last decade or so, this fund has been returning an average annual return of 4.23% to its investors. Inflation is always on the rise in the U.S. and hence the bonds held in this fund are constantly growing in value. The price movement of this fund is seen below:
Conclusion
These exchange traded funds prove to be a double whammy for retired investors. One is that they provide the much needed stability that investors need and the other is that they provide greater rate of returns than some of the other conservative choices of investment. Retired investors should choose those funds that provide consistent returns to them, irrespective of the volatility of the stock market.
