There are many investment options for retirees outside super but many prefer to prioritise security. Diversification is very important as it can help to minimise your risk.
Capital growth investments
Capital growth investments, such as property and shares, can rise and fall in value but over the long term they usually outperform other types of investment. This makes them important for increasing the time your savings will last. They can also provide retirement income streams. Your time frame is key with growth investments and you should be prepared to invest them for a number of years.
Shares are more flexible than property as you can sell them off in small numbers if you need emergency cash. However, they are more volatile and you may lose their value.
Managed funds provide a diversified mix of investments that are managed by qualified investment professionals and might be a safer choice as they are managed by experts.
If you invest most or all of your money in property, you lose the benefits of diversification. And, while property may be less volatile than shares, prices can fall. If you rely on rent for your income, there could also be a problem if you’re without a tenant for any length of time. Unlike shares, you can’t sell a portion of a property to free up your cash. The sale time is also much longer.
Savings accounts and term deposits are easy to open and there’s no risk of losing your initial investment. The trade-off is they usually pay a lower interest rate and there are no capital gains or tax benefits.
Whatever you choose, talk to an expert.