When selecting retirement funds, your choices run far and wide. Just the broad categories of funds into which you can invest for retirement include
- Currency funds: invest in global currencies
- Domestic stock funds: consist of various stocks of companies based in your nation
- General bond funds: consist of a variety of corporate bond funds (note that bonds almost always give lower returns than stocks)
- Government bond funds: consist of a variety of government bond funds
- Hybrid funds: contain a mix of stocks and bonds
- International stock funds: consist of various stocks of companies based in other nations
- Municipal bond funds: consist of bonds sold by local city governments
- Real Estate funds: consist of stocks of various companies in the Real Estate sector
- Sector funds: consist of stocks from a particular sectors, such as technology, communication
- Specialty bond funds
The trick is how to select the retirement funds that will give you a consistently good return. A fund that is very volatile might make you a lot of money right away, but crash just before you are planning to retire.
On the other hand, a fund that is extremely conservative might grow too slowly to provide you the retirement lifestyle you were hoping for.
What you need to do, then, is research. Which investment vehicles can you trust as reliable retirement funds? There are a couple keys here. The first is to diversify. In other words, don’t put all your eggs in one basket. That way, if one fund doesn’t perform well one year, you will have others to provide financial security.
The second key is to find out the longevity and stability of the funds you are looking at as retirement investments. For example, if a fund has had a 20% average growth over the past three years, but is only three years old, it may prove to be a bad investment decision somewhere down the road.
A twenty-year-old fund with an average return of 12%, however, is likely to be very reliable in increasing the value of your retirement portfolio in a significant way.
How do you find such trustworthy investment vehicles? The best option these days is to visit the websites of such tried-and-true investment firms as J.P. Morgan, Fidelity and T. Rowe Price. There you can find all the funds each company provides, as well as when each fund began and its average growth over the past few months, past year, past five years and since inception.
All that taken into consideration, following is a very partial list of some top-performing funds that you could turn into lucrative retirement funds:
- Large cap stock funds: American Funds Mutual; Sound Share Fund
- Mid-cap: FAM Value Fund; Ariel Appreciation Fund
- Small cap: T. Rowe Price Small Cap Value Fund, Royce Pennsylvania Mutual Fund
- Specialty funds: Cohen and Stears Realty Shares; SPDR S&P Dividend ETF
- International: Oakmark International Fund; Fidelity Spartan International
- Bond: Harbor Bond Fund; T. Rowe Price International Bond Fund
Whichever retirement funds you set up, make sure you put as much as you can into an IRA or 401K to avoid paying taxes on them while they grow.