Both growing their accounts and preserving capital is important to retirees. No one wants to outlast their retirement funds. Hence, it is vital to have retirement investments allocated in a way that generates income as well as growth. As Kavan Choksi UAE mentions, this balanced is ideally achieved by investors that use a combination of stocks and bonds to grow their wealth. 

Kavan Choksi UAE underlines a few high-return, low-risk investments for retirees

Retirees and individuals fast approaching their final working typically prefer safe investing over capital growth investments. Investors who are fairly comfortable with a certain level of risk are likely to own more stock assets and fewer bonds and vice versa. Here are a few investments that can help retirees to create a balance of income and growth:

• Dividend-paying blue-chip stocks: Quality dividend stocks have been a staple of retirement accounts for years. These stocks provide reliable and stable income through regular dividends from well-established companies that have strong financials. A large number of S&P 500’s most established companies are financially sound and less volatile. Many of them additionally have a history of consistent performance, which makes them perfect for retirees looking for steady returns and reduced risk. Dividends may even help offset inflation and preserve purchasing power over time.

• Municipal bonds: A municipal bond is a debt issued by a local or state government for the purpose of funding public projects and infrastructure. These bonds can provide retirees with low-risk, tax-free and stable income, and predictable returns. Hence, they are well-suited instruments for preserving capital and generating income. Credit risk among municipal bonds can vary quite a bit, depending on whether the bond is backed by a particular project, general creditworthiness of the issuing entity or by making it a revenue bond.

• Stable value funds: A stable value fund basically is a low-risk fixed-income security. Capital preservation is its primary benefit. Investors should not look for big price appreciation with it. Stable value funds are generally available to investors in a qualified retirement plan, such as a 401(k) and are a great place to store liquidity reserve. Such funds invest in high-quality, short-duration instruments like commercial paper and U.S. Treasury bills.

• Real estate investment trusts: Investors aiming to mitigate portfolio risk with dividend income very often turn to REITs. These are publicly traded, liquid real estate investment trusts. REITs have to return 90% of taxable income to shareholders in the form of dividends, and provide them with the chance to invest in income-generating properties without owning real estate directly.  Even though they do have a certain level of market risk, REITs would be a good choice for long-term investors seeking reliable income streams.

• Index Funds: Index funds distribute risk by following a market index such as the S&P 500, which includes a wide range of companies. This approach lessens the effect of individual stock fluctuations. By investing in a broad array of stocks, index funds reduce risk while allowing investors to benefit from overall market growth.

As per Kavan Choksi UAE, in addition to the options mentioned above, retirees may even choose to invest in high-yield savings accounts. They particularly can be a good place to hold cash for an emergency fund or a short-term need.