Preparation may be the key but finances can be tricky to manage (no matter which age group you fall into). Finances for soon-to-be retirees can turn into a major source of stress. Funnily enough, retirees living longer than their predecessors (which should be a good thing) seems to be adding fuel to the fire. You're reaching your golden years and that means a combination of relief and worry may be starting to set in. What happens if you run out of retirement funds half-way? How can you appropriately manage your money on a monthly basis? These are common questions and you’ve probably asked them yourself. Remember, however, there are many investment options out there and these can help you transition into retirement with greater peace of mind. Here are a few basic tips to guide you along the investment process. Don’t give up on stocks What's the first thing that comes to mind when you hear the word "investment"? Now, many people are tempted by the seemingly growing arsenal of new investment options out there but don't be fooled, stocks can still be great. Many experts will reaffirm the notion of keeping about 40 to 60 per cent of your portfolio in stocks (since there can still be a high percentage of return for smart investors). Focus on dividend growth Look out for companies with strong track records of dividend growth. This just might save your portfolio. Rising dividends could indicate that a company is being led by a confident management team and also show that a business is enjoying a sound financial position. In addition, fast-growing dividends can help stocks become more popular among investors. Income investors may also be attracted to the prospect business, which can help boost their share price to an even higher level. Create a cash cushion Expect bear markets to be imminent. The savvy investor should know how to manage his or her risk. Withdrawals during tough times can result in losses so aside from your required minimum distribution from qualified accounts, consider increasing your cash cushion to ride out bear markets. Bigger cash cushions can put retirees in a more confident and comfortable financial situation in the long run. Be open to diversification Easily one of the longest-standing rules when it comes to successful investing, diversification can open the door to many other opportunities when creating a stable portfolio. Diversify between companies that operate in different locations throughout the world. This can grant you a certain amount of immunity from economic or political turns of events. Ultimately, diversification can help reduce risk and enhance returns as investors enjoy higher growth rates in specific regions or countries. The nature of diversification involves the lagging of some areas and the leading in others so be prepared for portfolio allocations to accommodate leads and lags. An experienced financial advisor can help you through this. By staying sharp and staying smart about your risk allocation, investing can become less of a daunting chore. As always, be sure to do your due research before opting for any approach and look for financial advice whenever you're feeling unsure about a situation.
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