Increasing the value of your retirement nest egg

Nest Egg

A nest egg is important, but let it grow and work for you. Image: Andreas Kollegger/Flickr/CC BY

At one time, a wage earner in the United States could put earnings into a bank CD for retirement and live on the interest. But with the cost of living rising faster than interest rates, that is no longer possible. There are many other investment strategies a wage-earner can use during his or her working years to increase that retirement nest egg. However, there are always risks involved with investing. We recommend seeking reputable professional advice before putting money down on any type of investment.

Dividend paying stocks

Dividends are a distribution of some of a company’s earnings, paid out periodically to certain stockholders. Dividend payments are decided upon by a company’s board of directors. They can come in the form of cash, property or stock. They are generally measured in fractions per shares owned.

Again, investing in the stock market always carries risks. That is perhaps especially true at this volatile time in the nation’s economy. Use professional advice to locate a secure and stable stock that traditionally pays out a regular dividend to its shareholders.

Equity income mutual funds

Mutual funds are a type of investment designed to produce income for its shareholders. Income is the primary objective of an equity income mutual fund. These funds are considered a relatively low-risk investment. In a mutual fund, all shareholders contribute to the fund and managers decide what low-risk investments to make with the money.

Don’t cash out your mutual funds when you come up short; a pay day loan is a better solution for a one-time expense.

The advantage to these funds are their relative safety and their ease to buy and sell. The disadvantages include a fairly high cost and that they are often fraught with hidden fees. Their ads can be deceiving, and salespeople will often use confusing jargon. Again, professional advice is encouraged to navigate the tricky waters.

Exchange Traded Funds

An Exchange Traded Fund, or ETF, is similar to a mutual fund. But EFTs are traded all day on the major stock market exchanges, just like stock. They allow investors to sell short, buy on a margin or to purchase as little as a single share. The cost is lower and the investor has more options.

Again, though, consultation with a professional is recommended before diving in.

Sources

Answers
Daily Finance
Investopedia

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