5 Best Investments To Make in Retirement To Keep Building Wealth

Leading up to retirement , you might be crafting a game plan for how to establish, grow and contribute to your financial wealth after you are done working.

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That’s exactly what you should be doing, but what about when you stop working and start retiring? There are lots of ways to continue to build your wealth up in retirement by making smart investment moves.

“One of the biggest mistakes retirees (and near retirees) make is becoming overly conservative,” said Robert R. Johnson, a chartered financial analyst (CFA) and a professor of finance at Heider College of Business, Creighton University.

“Some investors mistakenly believe that if they are going to retire at age 65, that age is their investing time horizon and focus solely on protecting wealth instead of continuing to build wealth.”

“Even if you were a diligent saver your entire career, it can be hard to save up enough money to live the retirement of your dreams,” added Erika Kullberg , an attorney and personal financial expert.

“Who doesn’t want a bit of extra cash flow on hand? Once you retire, the goal is usually to stop working altogether. But that doesn’t mean you can’t find ways to earn extra money. You can invest your cash to help generate extra retirement income both before and after you retire.”

According to our experts, these are the five best investments to help you continue building wealth after you retire .

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Diversify Your Money

As the saying goes, you shouldn’t put all of your eggs in one basket. In this case, the eggs are your money, and the basket is the investments you choose to put funding into. Having an array of investments will stabilize your return — should one go south, the others will bring in a nice payday to even it out.

“The goal should be to maintain a balanced investment portfolio of stocks and bonds to help lower your risk,” explained Kullberg. “By diversifying your investments, you make the chance of losing all of your savings lower.”

For those who are really risk averse, Kullberg suggested investing in a certificate of deposit (CD) that comes with a guaranteed amount of interest and no risk, but only if the account is FDIC or NCUA insured.

“You stand to earn more by investing in the market, but a CD offers a lot of security, and right now interest rates are strong,” she added.

Re-Configure Your Investment Portfolio

Maintaining a diversified portfolio continues to be a vital part of your financial life, even in retirement. That being said, it’s advisable for retirees to shift towards more income-generating assets like dividend-paying stocks and bonds, as well as diversifying along the way.

“Max out tax-advantaged accounts like IRAs and 401(k)s,” said John F. Pace, a certified public accountant (CPA) and tax manager for Pace & Associates CPAs . “The tax benefits provide an immediate return and compounding interest works in your favor over time. I’ve seen clients accumulate hundreds of thousands in these accounts.”

Pace recommended investing in low-cost index funds, specifically a mix of stocks and bonds to balance risk. “They provide broad market exposure and solid returns over the long run,” he said.

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Real Estate Investments

Pace also recommended retirees consider investing in real estate as it’s a lucrative way to generate passive income during retirement and perfect for anyone looking to start small and expand as they gain investing experience.

Owning rental properties or investing in real estate investment trusts (REITs) can bring in a consistent income during retirement, as well as capital appreciation over time. Just make sure you are putting your money in stable, growing markets.

“Rental income and property appreciation can generate strong returns,” Pace continued. “I have clients with small real estate portfolios that will provide income for life.”

Consider Annuities for Guaranteed Income

Annuities, if properly set up, can provide you a guaranteed income stream for life, though they tend to get a bad rap, according to Johnson.

“[Annuities] can provide guaranteed income and peace of mind to the retiree and the retiree’s family,” he said. “Having an annuity cover your basic living expenses is a terrific cornerstone to a retirement income plan.”

In particular, Johnson advised considering a longevity annuity, a stream of payments that starts when an individual reaches a certain age (like 85 for example).

“Having a longevity annuity allows one to take more risk with the rest of your portfolio,” Johnson described. “Too many investors completely derisk their portfolios upon retirement. By purchasing a longevity annuity, one can afford to bear more of the risk of the stock market — and likely achieve much higher overall portfolio returns.”

If you decide to invest in a longevity annuity, “you’ll have a secure source of income late in your life at a reasonable cost.”

Johnson also noted that having this guaranteed income can free up your retirement fund to use on things like travel or a vacation home.

“Many retirees who have annuities are freed from worrying about the ups and downs of the stock market,” he added. “The peace of mind that annuities provide can’t be understated.”

Keep an Eye on Inflation

While you might be done working for the economy, you cannot avoid the byproducts of it, such as inflation.

Your purchasing power can be weathered away by a bad economy, particularly over a long period of your retirement, which is why it helps to keep a watchful eye on the markets, interest rates and inflation .

“Stay invested,” said Pace. “The temptation may be there to time the market, but statistically you’ll achieve the best results by holding long-term. I’ve witnessed too many clients hurt their returns by jumping in and out. Stick to your strategy.”

Whether it is stocks, real estate or Treasury Inflation-Protected Securities (TIPS), it’s important to know how the market affects your money.

This article originally appeared on GOBankingRates.com : 5 Best Investments To Make in Retirement To Keep Building Wealth