Life Insurance Quotes

Investing a nest egg responsibly

10/12/11

In many cases, investors nearing retirement have saved significant amounts of money in preparation for a large, lump-sum investment designed to sustain them through their retirement years. According to The Economic Times, these types of investments, while potentially beneficial, can be dangerous for many retirees who are often targets for financial advisers who see them purely as a commission and will advise investment plans that may not be in the retirees' best interest.

The source notes that most retirement plans start with long term financial investments, like 401(k) plans. These programs are beneficial because there is generally no minimum investment, and deposits are flexible and typically affordable. Once a savings plan like this has accumulated, however, some investors choose to move the funds into an environment that will produce gains through interest.

Annuities are a popular choice for many investors, but navigating the specific types can be difficult, as each has benefits and drawbacks. Fixed annuities, for instance, guarantee certain gains, but do not take inflation into consideration, and so may not be viable as retirement approaches its 10 or 15 year mark.

Communicating with a financial adviser is often the best way to ensure that an investment package is the right one. Market trends can often inform annuities sales, for instance, as the Insurance Information Institute notes that fixed and variable annuities saw divergent losses and gains in 2010, respectively. Short term financial trends however, should have little bearing on an individual decision. 

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