Episode 42: What Type of Investments Should a Retiree Use?

Published: April 8, 2021 | Updated on: April 22, 2021

Thank you for joining us for episode 42 of our Money Wisdom Question Series, where we answer common financial and retirement investment questions. Today’s question is “What type of investments should a retiree use?”

Investing When You’re Working vs. Investing When You’re Retired

I think this question comes from the standpoint of, should I invest differently when I’m retired versus when I’m working? That’s a very insightful question because if you just walk down the aisles of the grocery store and you pick up a financial magazine, you’ll read a lot of commentary on one of the best mutual funds and the best stocks to own today. What’s bothersome to me about those articles is it doesn’t take you into account; your unique situation. It doesn’t include your ability to tolerate the ups and downs of the stock market, which some people can tolerate, most people cannot.

Different Types of Investments

What types of investments should retirees have? First of all, I want you to understand the concept that once you’re retired, you’re no longer adding money to investments. There’s not an advantage to the market going down. When you’re working, the market goes down, you’re adding to the investment so you’re buying shares cheap. When you’re retired and you’re taking money off that portfolio, now it’s the opposite. You’re having to sell more when things are low and sell less when things are high to get that monthly check.

We want to invest, for the most part, in retirement to get a reasonable rate of return, but to spin off monthly income. Think of it as a pension plan. What is a pension plan’s job? It’s to send out a monthly check to the people that money was promised. To think of investing that way in retirement versus just for growth like you may have in your 40s and maybe early 50s.

What types of investments for retirees? Well, you could use stocks, mutual funds, exchange-traded funds, which are a type of mutual fund. You could use bonds. There are variances within those categories, but I want you to think of investing in retirement more as investing for a reasonable rate of return, but also steady income.


Typically, people de-risk their portfolios in retirement. Now, I understand this gets a little technical. There are subcategories that I haven’t gone into. If you have any questions, feel free to contact us. We can help you. We have resources that we can send to you that explain the different types of ingredients that can go into building a good income portfolio.

Thanks for joining me and I hope you found this information helpful!

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