Most older women need to be more conservative in their investments. So you may want to shift from building assets to preserving them. But this should be done with another thought in mind:
Investing for Retirement
Most investment authorities believe it pays to keep a reasonable balance between bonds, which tend to preserve your money, and stocks, which have a potential for growth.
Stocks, for growth
Striking the right balance is especially important now, when interest rates are so low that the coupon rate on 10-year Treasury bonds is hovering around a measly 2 percent. In contrast, the broad market of large-company stocks (the S&P 500 index) was up around 30 percent in 2013 and about 14 percent in 2014, with dividends reinvested. So having some of your portfolio in certain forms of stock investments may be a smart thing to do.
Own the whole market
Total Stock Market index funds, for example, avoid some of the risks of actively managed funds. They also offer important cost advantages: Example: William F. Sharpe, a Nobel laureate in economics, reports that owners of the Vanguard Total Stock Market Index Fund (annual expenses 0.06 percent), "could look forward to having the funds saved for retirement provide 20 percent more purchasing power" than could owners of actively managed stock funds, which have typical expenses of 1.12 percent (The New York Times, 1/12/2014).
The message here is that costs compound, just as gains or losses do. So an ultra low-cost stock investment gives you a built-in advantage (though no guarantee of gain) for long-term investing. That's one reason total market index funds routinely out-perform most actively managed funds.
4 good websites
Here are four websites that AskNelly chose for their clear and valid descriptions of how to invest for retirement. The site most useful to you will depend on how much you know about investing. Our suggestion: Skim through all of them, then go back and read the one that most appealed to you.
1. NOLO : It might seem strange to go to a legal site for investment suggestions, but we think you'll find the suggestions shown here prudent and helpful.
2. biz.yahoo : This site lets you choose from 17 different links to get the low-down on index funds as a total investment strategy. Most of the links are excerpts from John Bogle's seminal book, Common Sense on Mutual Funds, so you can quickly see his main points. Bogle is the founder of the Vanguard Group, the largest mutual fund company in the world.
3. CNN Money : This well-written site, takes you through the basic issues in conversational language. Makes it easy to learn the ideas you need to absorb.
4. Fidelity.com : A bit heavy on numbers, but still a useful guide in slide-show form. Instead of text, it uses graphs and diagrams to show the facts you may want to know. One helpful graph shows the estimated effect of different withdrawal rates.
Please Note: AskNelly.com is not a Registered Investment Advisor. The "Money" section of AskNelly.com is meant only to provide information to help you understand your options. It is not advice you should necessarily act on. Actionable advice has to take into account your individual situation and should come from qualified professionals.