10 Types of Investments Every Retiree Should Know

How Should You Invest Your Hard-Earned Savings?

It might be the most important question you ask about your retirement. The financial services industry is rife with recommendations, yet few investors fully understand what investment vehicles are available to them—the opportunities, the risks and how suitable each one may be based on their unique goals. Those in the financial services industry—financial advisers, brokers, etc.—often use jargon to steer you toward investments that benefit them or their business. Few explain how certain investments work and why some options might be more appropriate for your situation than others. 

That’s why we put together this guide. At Fisher Investments, as a fiduciary, we are committed to investor education and believe an informed investor is a better investor. We’ll introduce a variety of the most common investment vehicles and detail the risks and opportunities of each. For a deeper discussion of investments’ pros and cons, and how they may help you achieve a comfortable retirement, we recommend contacting Fisher Investments to learn more.

Investment Account Types

Before we dive into investment choices, it’s important to understand the different account types you can utilize. This is because the type of account you use can help determine whether a certain investment type is appropriate for your situation and goals. The main account types are: 

• Taxable: These include individual and joint accounts, corporate accounts and certain types of trusts. The tax on gains and income varies depending on the account type and the account owner’s tax bracket. 
• Tax Deferred: Common types include traditional 401(k)s and Individual Retirement Accounts (IRAs).
• Tax Exempt: These range from Roth 401(k)s and Roth IRAs, which allow for tax-free growth, to 529 Savings Plans, that allow for tax-free withdrawals for qualified education expenses. Below is a breakdown of common types of accounts and the associated tax treatment of contributions and withdrawals.

Below is a breakdown of common types of accounts and the associated tax treatment of contributions and withdrawals. We recommend consulting a tax advisor to create a plan that fits your individual circumstance.
 

Exhibit 1: Retirement Accounts' Tax Treatment
 

¹Employer plan dependent.
²Full deductibility of a contribution is dependent on income limits and whether an individual is covered by an employee-sponsored plan. 
³Higher earners will not receive a tax deduction for IRA contributions. 
⁴Early-withdrawal penalties generally apply before age 59.5, with some exceptions. 
⁵Earnings can be withdrawn tax-free only after account is open 5 years or in case of disability or death.

While this isn’t an exhaustive list of account types, it can help you consider how certain investments may be more suitable for some account types than others.

Main Types of Investment Options

Equities

An equity investment represents partial ownership of a business or other entity. There are two main types of equity investments: common stock and preferred stock. While both are technically equity, these securities are very different.