Its an conventional advice that we should invest in a mix of stocks and debt, minimize the risks and maximize the returns to reach our retirement goals. As both money and stock markets are volatile, its quite difficult to find a low risk investment options. Although option of Treasury Inflation Protected Securities (TIPS) are bonds that promise a total return that adjusts with the CPI index for inflation. Although TIPS is risk free but it gives a minimum return and you may not reach your retirement goals. So i came up with some tips to make your investment portfolio risk free and maximize your returns :-
1) First of all pay off your Debt
It makes no sense to make an investment in retirement plan which yields 6% annual returns although you are paying 15% interest on your credit card bills. At the end of day, you lost 9%, by doing this you are fooling yourself.
2) Make investment decisions yourself
Dont let any other person to take your financial decisions. You may take an financial advise from an expert, but he might be trying to sell his own products to you. So think before you are buying any such product.
3) Define your retirement goals precisely
You should know what minimum standard of living is acceptable. You should define your retirement goals in quantitative terms. This prediction should be made after considering inflation over the years.
4) Invest in products you know
If you don't know much about stock markets than just don't invest in shares. Don't be greedy. Most of the people who are earning huge from stock markets have years of experiance in investing in stocks.
5) Review your portfolio every year
Current economy is highly volatile. You need to shift from stocks to bonds in case the economy is going down. As debt is safe and in the down periods interest rates are normally high.