Are you looking for unique ways to save for your future? Diversifying your retirement savings strategy is a great way to prepare for the years beyond your traditional working life. Registered Retirement Savings Plans (RRSPs) are an essential part of many Canadians’ financial preparation, but they don’t have to be the only component.
In addition to RRSPs, there are various ways to save for retirement that offer stable growth potential while also reducing risk through overall portfolio diversification. Whether you’re just starting out or already have a substantial nest egg set aside, here’s a look at two unique ways adults can save and invest for their retirement beyond RRSPs.
01. Invest in Alternative Investments
When you are seeking ways to save for retirement, you may want to consider alternative investments. Alternative investments are financial assets that are not traditional, as they are not stocks, bonds, or mutual funds. They can include private equity, venture capital, real estate, hedge funds, commodities, and more. These types of investments give individuals the ability to access markets outside of traditional stocks and bonds. Additionally, alternative investments have the potential to outperform traditional investments. For those willing to take on a bit more risk, alternative investments can offer unique benefits.
A few important notes:
- They are typically less liquid than more traditional investments, such as stocks and bonds, and typically require a longer investment timeframe.
- Alternative investments can offer a unique diversification opportunity for investors, as they typically have a relatively low correlation with traditional assets (Source: CFA Institute).
- You can invest in certain alternative investments THROUGH your RRSPs. Alternative investments may not be suitable for everyone. It is important to consult an Investment Advisor before you invest to ensure this is right for you.
If you are interested in discovering the alternative investment opportunities we offer through Raintree Financial Solutions, and finding out if this way of saving for retirement could complement your current strategy, we invite you to contact one of our Wealth Advisors.
02. Invest in Dividend-Paying Stocks or Mutual Funds
Stocks and mutual funds are both investment vehicles that allow individuals to participate in the financial markets. Stocks are shares of ownership in a publicly traded company, which gives the shareholder a claim to a portion of the company’s assets and earnings. Investors buy and sell shares of stock with the hope of achieving capital gains, which is the appreciation of the stock’s value over time. Mutual funds, on the other hand, are a collection of individual stocks and/or other assets like bonds, commodities, or real estate, managed by professional investment managers.
Investing in dividend-paying stocks or mutual funds offers several advantages to investors who are looking for ways to save for retirement. By investing in dividend-paying stocks, investors can enjoy an additional source of income through regular dividend payments. This may add a sense of stability to an investment portfolio and may provide a steady stream of income during both good and bad economic times. Dividend-paying stocks also tend to be more stable and less volatile than other stocks, making them a safer investment option for risk-averse investors (Source: Fidelity Investments).
Overall, investing in dividend-paying stocks or mutual funds can offer investors a combination of regular income, long-term growth, stability, and diversification. Please note that you can also invest in certain mutual funds through your RRSPs.
Retirement is a long-term focused effort that requires many considerations. Balancing different investment options, diversifying your portfolio, figuring out the right path for you, and planning for the retirement itself can all be overwhelming. Alternative investments and dividend-paying stocks & mutual funds offer unique ways that you can save for retirement beyond just your RRSP.
However, like all investments, these strategies are not without risks. It’s important to weigh all pros and cons with these different investment options to make sure what you choose is in line with your overall financial goals and objectives. Remember, there is no single perfect strategy. Seeking advice from qualified professionals is always strongly recommended when making any financial decisions.
At Evergreen Wealth Advisory, we understand the challenges of saving for retirement and have experience dealing with different strategies that can lead you towards success as you move into this next stage of life. If you want to take the next step in planning for retirement today, please schedule a consultation with one of our Wealth Advisors who can provide expert advice tailored just for you.