Investing for Retirement – Getting the Right Advice

Jeremy Biberdorf  |

What have you got planned for when you retire from your career? This is an important question to answer, especially when it comes to finances. It may seem like retirement is a way off yet, but the time goes faster than you might think, and you need to figure out how you are going to get the money you need to live comfortably in retirement.

The good news is that it's still possible to retire early and live well, even if you are not especially well off. One of the best ways to do this is to invest wisely. In order to do this, you need to research the right choices and pay attention to the right people.

Why listening to the right people is important

Getting as much information and assistance as possible is a good idea, if you are thinking of investing for your retirement. However, you need to make sure that you are getting the information from the right sources. Even supposed investment experts are not always what they seem.

For instance, you may have heard of investment author Peter Schiff. He became famous following his prediction of the global financial crisis. You might think this makes him some sort of financial genius. However, Schiff had consistently been predicting issues with the American financial system since the early 2000s. It was a case of predict something consistently enough and you stand a good chance of it coming true. This is not really great insight, it's more the use of shock tactics on the basis of limited research.

It's far better to listen to advice from someone who has true financial insight, such as Benjamin Graham. He wrote about the Graham formula in his book The Intelligent Investor. The formula, which was first written in 1962 and revised in 1974, shows you how to value under priced stock, so that you can make a 'value' investment. Take a look at The Intelligent Investor review, to see how useful this book can be to you, as you decide what investments to make. You can also find out more about Graham's criteria for finding a value investment.

What about less risky investing?

Although investing in value stocks is rising in popularity in the current financial climate, according to several analysts, you may be more comfortable with a less risky investment route. If this applies to you, you should consider the option of a Roth IRA. This type of investment account is similar to a traditional IRA, but the investment is made after tax. This means that you have access to tax free funding when you retire.

If you have a low, or moderate income, you may want to look at a specific strategy; the Roth IRA Conversion Ladder. The basics of this strategy are:

  • Invest in a traditional IRA while you are working.
  • Gradually change over your investment to a Roth IRA when you first retire.
  • Pull back money tax free from the Roth IRA.

This means that you get the tax advantage when you are working and pay reduced tax when you transfer the investment over because your overall earnings have reduced.

Whichever retirement investment option you choose, remember to do your research and get the best advice from people who have in-depth knowledge and are not simply commentators.

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The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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