The Truth About Best Retirement Investments That Advisors Won’t Tell You

The quest to find the best retirement investments often guides people toward standardized advice that tells an incomplete story. The numbers paint a stark picture – more than 1 in 3 retirees get less in Social Security benefits than they expected during their working years. Your retirement consultant in Fresno CA will explore how this reality makes the right investment strategy crucial.

The S&P 500’s 5% rise year to date as of June 27 might look promising, but finding suitable investments to retire comes with challenges that many advisors tend to overlook. To cite an instance, a modest annual inflation rate of 2.5% would eat away at a dollar’s spending power by 46% over 25 years.

The hidden risks of popular retirement investments

Financial professionals rarely talk about the hidden dangers lurking in popular retirement investments. Your 401(k), the life-blood of retirement planning, comes with buried fees that eat away at your savings quietly. These fees hide in investment costs or fine print and grow with your account balance. The service costs stay the same.

Target-date funds are accessible to more people now, but they come with their own problems. They run on preset formulas with zero customization to fit your specific needs and lack any hands-on management. These “safe” investments crashed hard during 2022’s market swings.

Overlooked but effective retirement investment options

Smart investors should look beyond regular retirement plans to explore several hidden options that can boost their financial security. Financial advisors rarely talk about these alternatives that come with unique benefits.

Deferred Income Annuities (DIAs) work just like personal pensions and guarantee income years after you buy them. You can secure future cash flow whatever the market does. Your “retirement paycheck” grows larger the longer you wait to take income. People between 55-65 years can use DIAs to plan 5-10 years ahead and potentially earn more than immediate annuities.

Real Estate Investment Trusts (REITs) beat traditional stock indexes consistently in the long run. Between 1990 and 2020, REITs performed better than U.S. stocks 56% of the time. Adding REITs to your portfolio yielded 10.49% yearly with lower risk (9.33%) compared to portfolios without them (10.02% return, 9.50% risk). REITs also pay higher dividends around 4% while the S&P 500 pays just 1.27%.

Dividend-paying stocks give you regular income plus growth opportunities. These dividends made up about 40% of total stock market returns in the last 90 years. Companies that keep increasing their dividends usually do better than others. Reliable dividend payers like Procter & Gamble (2.7% yield) and Chevron (4.4% yield) stay strong through economic ups and downs.

What most advisors won’t tell you about portfolio strategy

Financial advisors rarely discuss the secrets of portfolio construction. Many stick to traditional asset allocation models that overlook your personal risk tolerance and time horizon.

Your advisor probably won’t tell you that modern portfolio theory, which forms the basis of their recommendations, depends on past data that might not reflect future market behavior. So textbook diversification could leave your investments exposed during market-wide downturns.

Your fixed income allocation needs more attention than it usually gets. Smart advisors should explain how inflation could affect your strategy with bonds, especially since bonds tend to perform poorly in inflationary environments.

Conclusion

We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to see how we can help you Retire ”Your Way!”

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Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. The commentary on this website reflects the personal opinions, viewpoints, and analyses of the author, Soutas Financial, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security, or any security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Foundations deems reliable any statistical data or information obtained from or prepared by third party sources that is included in any commentary, but in no way guarantees its accuracy or completeness.

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