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Retirement Investment Must be a Mix of Growth Assets and Defensive Assets


The importance of investment is known to all. It is particularly essential to make enough investment for the retirement days so as to lead a comfortable life as you grow old. But not many people know how to invest the right way.

There are so many options to choose from that it can get extremely perplexing. Learning about the various investment options can be quite taxing and this is the reason why most of us keep delaying this essential task.

In this article we shall provide you some pro tips to invest wisely and reap great returns as you age. So, let’s get started!

Learn to Distinguish between Growth Assets and Defensive Assets

As you plan to invest your hard earned money, you must ensure that all your funds are not invested in a single firm or sector.

The category you invest in must also be given due consideration. Diversification of investment is of utmost importance. What is also important is to understand how the investments have been categorized so as to invest small amounts in each category.

Two of the main categories of investment include growth assets and defensive assets. These are also known as asset classes. Here is a look at both these types in brief:

Growth Assets

As the name suggests, these are meant to grow your money. They include investments like stocks, property, private equity and the likes. Their value increases over the time and they offer high rate of return especially in the long run. However, the risk involved in this type of investment is equally high. These markets are quite volatile and you cannot expect a stable return at any point of time.

So, even though you can get high return from such investments but you cannot be sure if they will reap the kind of return you aim at when you really need money.

Defensive Assets

These assets don’t offer very high rate of return however they do not carry much risk either. Some of the examples of this type of investment are cash, fixed deposits and debentures. Although your money may not grow substantially with this option however you can be sure that it will keep growing constantly. So, you know exactly how much to expect at different intervals.

Choose a Mix of Growth and Defensive Assets

Your retirement investments should be a mix of growth and defensive assets. Growth assets will ensure your money grows substantially over the time and you get good return on investment. On the other hand, you will always have a certain sum of money to fall back on in the form of defensive assets. So, you can be financially secure.

We hope this small piece of writing helps you take smart investment decisions for your retirement. For a better understanding of these investment options it is suggested to get in touch with professionals especially dedicated to help people invest wisely. They will evaluate your financial condition and recommend options accordingly.