When investing for retirement, investors should remember that low-cost index funds generally outperform actively managed funds, says U.S. News and World Report. Investing in index funds is far more effective than actively picking investment stocks. Domestic index funds are safer retirement investments than foreign funds, due to the dynamism and strength of the U.S. market economy.
Over the years, savers may often wish to adjust their asset allocations, according to CNN. This is due to the fact that many people become more risk-averse as they age.
Stocks outperform bonds for retirement investors, and short-term bonds are preferable to their long-term counterparts, according to U.S. News and World Report. Stocks are ideal for driving returns higher, while small amounts of short-term government bonds provide retirement investors with safety and stability.
It is wise to begin investing for retirement immediately after completing college, reports CNN. People who invest early can better take advantage of compound interest to grow their retirement nest eggs. Each year, people should save the maximum amounts in their tax-advantaged retirement accounts. Plans such as 401(k) and 403(b) plans are popular tax-free vehicles for building up retirement savings quickly. IRAs and Roth accounts are other popular vehicles for retirement savings.