A sound investment strategy for seniors involves creating a plan and balancing the investment risk with the need for income security. In addition, the retiree should also review his spending plan and the sources of income, such as social security, pension and other investments, states Bankrate.
Seniors who are apprehensive of investment risks can invest in bonds because bonds mitigate risks. But balanced mutual funds are also good for conservative investors because they provide exposure to stocks and bonds in one fund and, despite the fact that stocks are volatile, they have an expected return that is higher than inflation. Thus, balanced funds with 20 percent to 40 percent of their assets in stocks and the rest in bonds are wont to yield consistent returns with a potential for gain on the upside, reports Bankrate.
A real estate investment trust is another investing option for seniors that provides diversification and generates income. However, they are very volatile, but the investor can mitigate the volatility by diversifying his investment in the REITs both geographically and in the type of commercial property.
Lastly, dividend-paying stocks are also an excellent investing option for seniors because they provide a steady flow of income with a potential for growth, reports Bankrate.