Bonds, Cash and Stocks: Wise Ways to Invest Your Retirement Savings

Investing money for your retirement is not a sprint, it’s a marathon. Ask any financial advisor and they’ll tell you that the sooner you can start setting aside money in retirement savings plans, the better off you’ll be in the future. However, there are a lot of options out there when it comes to investing your hard-earned wealth.

With so many options to choose from, it can feel overwhelming trying to decide which ways are the best ways to invest your retirement funds. Below you’ll find some of the best options for allocating your money so you can enjoy a comfortable retirement in the future.

The Do-it-Yourself Approach

Many Americans are already DIY fans when it comes to projects around the house, but where do you fall on DIY for your retirement savings? A lot of people work with financial advisors, but you don’t have to be an investing genius to make some sound decisions. CNN Money points out that there are tools available to help you assess your risk tolerance levels and preferred asset allocations. The result is a mix of stocks and bonds recommended that can help you prepare for retirement wisely.

Although riskier, you could also just pick your own investments. Whether it is finding the right bonds to invest in or following price info from to select the right energy market stocks to fuel your retirement, it’s always possible to build your own retirement savings plan from scratch.

Decide Upon Stocks Based on Age

By this, it doesn’t mean you should buy older stocks, but rather, determine how much of your portfolio to invest in stocks (stock mutual funds) based on your age. has a helpful guideline for you to follow that works as follows: subtract your age from 100 and invest the difference.

So, if you’re 30 years old, that would make a difference of 70. You would then want to invest 70% of your wealth in stocks for the time being. This approach doesn’t come without risk. First and foremost, stocks tend to produce higher returns over time, but past performance is never a direct forecaster of future performance.

The best way to use this is to reassess your portfolio balance on a regular basis to ensure your wealth is moving away from riskier stock mutual funds as you age, and reallocating into safer, low-yield returns that protect your overall investments as you near the point of withdrawing from your accounts.

Diversify Your Holdings

It is never a good idea to allow your investments to become too dependent upon one industry or even investment type. For example, investing all of your retirement savings directly into stocks leaves you vulnerable to the sometimes severe ebbs and flows of the stock market. A boom could make you rich, but a bust could wipe out your savings entirely.

Likewise, you should never focus all of your investments into one industry. For example, investing in construction and housing-related industries prior to 2008 would have left you feeling wise as those industries boomed. However, when the housing bubble burst in 2008, companies across housing and construction were ravaged by the Great Recession, and your retirement savings would have gone right down the drain with those sectors.

Diversify your holdings across various sectors, such as healthcare, energy, housing, and others, while also diversifying the types of holdings you own. By all means, play the stock market through mutual funds, but don’t be afraid of low-risk options like government bonds either.

Start Investing Early!

The best thing you can do is invest your money early. Whether you walk out of university with a good job in hand or are starting at the bottom rung of the corporate ladder, the best success is realized when you wisely invest at a young age. USNews notes that even someone investing $1,000 annually from age 20 to 30 has a significant head start over another individual investing $1,000 annually starting at 31 and continuing for 35 straight years.

How’s that possible? Compound interest. The longer your money has time to sit and grow, the more you can enjoy returns on your returns. For example, with 7% annualized returns (estimated), that first individual would have $168,515 in the bank by the time they’re 65. The second individual would have just $147,914. Time can work wonders with compound interest!

There is no one proven way to properly save for retirement. The best path forward requires a combination of investment strategies to ensure your money is well placed to grow in both high- and low-yield environments over time.


Eleanor Cole writes about investments and planning for retirement, along with other financial topics. She works as a personal finance consultant and has years of experience.

About the Author