There’s a good reason why the stock market is one of the most popular ways to save for retirement. It has a history of steady progress over many years and gives an average return of about 10% per year.
The S&P 500 index has never lost money in any moving 20-year period, but some people don’t like how reliable it is. A lot of people either can’t handle how the market changes every day or don’t like the idea of having stocks at all.
There are many ways to build a solid retirement fund other than buying in stocks, which is good news if that sounds like you.
Here are 7 of these types of plans that can help you reach your retirement goals without investing in stocks.
1. Rental Real Estate: A Source of Passive Income
Putting money into rental property is one of the best tried-and-true ways to get rich without investing in stocks.
If you buy land in an area that is in high demand, you can set up a steady stream of income that usually goes up with inflation, giving you financial security over the years.
To be successful with renting properties, you need to make sure that the rent you get covers all of your costs, like the mortgage, property taxes, and repairs, while still leaving you with a profit.
Having rental properties comes with big tax perks that go beyond just covering costs. It’s a good choice because you can deduct things like mortgage interest, home repairs, and even some trip costs from your taxable income.
But rental property needs active care, whether it’s dealing with tenants or keeping the property in good shape.
You can hire a property management company to help you with this, but it will cut into your profit.
But if you take good care of your rental properties, they can give you a steady stream of cash and value over time.
2. Real Estate for Capital Gains: Profiting from Appreciation
One more great way to get rich through real estate is to use capital gains. Instead of renting out properties to make money, this strategy is based on buying properties, keeping them, and then selling them when their value has gone up.
You can reach this goal with a single home or a group of investment houses. Real estate usually goes up in value over time, especially in popular areas, so when you sell it, you’ll have a return.
This gain, or “capital gain,” can help your retirement fund a lot. You have more time for the property to go up in value if you start early.
Capital gains are a great way to make money from real estate purchases without having to deal with the day-to-day tasks of property management.
If you plan carefully, you can make big gains that will give you extra cash for retirement without having to deal with renters or rental issues.
3. Bonds: A Conservative Investment with Predictable Returns
Bonds are a great choice for people who want security over high returns. Bonds offer a steady income over time and generally have less risk than stocks, which makes them appealing to investors who don’t like taking risks.
When you buy a bond, you borrow money from a seller, like the government or a business, and in return, they promise to pay you back with interest after a certain amount of time.
Bonds from stable companies or states are known to protect your initial investment and earn you interest at a rate of about 4% to 6% per year.
Even though this return is smaller than the average return on the stock market over the past few decades, the stability of bonds can give you peace of mind, especially when your retirement savings are at risk.
Bonds are often recommended by investors like Dave Ramsey as a better and less volatile way to save for retirement.
Bonds can be a great way to protect your wealth as you get close to retirement if they are set up properly in a retirement portfolio. They offer steady income and safety.
4. Fixed Annuities: Guaranteed Income for Life
Another safe way to save for retirement is with a fixed annuity. Insurance companies sell these kinds of investments that claim a steady return over a set amount of time.
Annuities often offer sure income for life, which means that you won’t run out of money, which is a big plus for retirees who want peace of mind.
It’s easy to understand how set annuities work. When you give an insurance company a certain amount of money, they promise to pay you a set amount of money every month for a certain amount of time, or sometimes for the rest of your life.
Since the rate is usually higher than that of a savings account, annuities are a good option for retirees who want to make money.
In exchange, set annuities usually don’t have the chance to grow in value like some other investments, which is a weakness. When people retire, annuities are best for them if they want stability more than big returns.
5. Precious Metals: A Hedge Against Inflation
People have long thought of gold, silver, and platinum as safe ways to keep their money and protect themselves from inflation.
A lot of people think that valuable metals are a good way to protect their money when the economy is bad because their value doesn’t usually go up or down with stocks or bonds.
Adding precious metals to your retirement account can help it be more diverse, but you need to be very careful when doing so.
Precious metals don’t earn money or pay returns like stocks or bonds do, and their prices can change a lot.
To lower your risk, financial experts often say that you should only hold a small amount of valuable metals in your retirement portfolio.
Even with these warnings, rare metals can protect you from inflation and market downturns, which makes them a good choice for a diversified, safe retirement plan.
6. Collectibles: Profiting from Passion Investments
As an option to stocks and bonds, collectibles like fine art, old cars, rare coins, and wine are becoming more and more popular.
If you know a lot about a certain subject or like to gather things, these real things could be a unique way to get rich.
Collectibles don’t bring in regular money, and people have very different ideas about how much they’re worth. But if you know how to spot important things, they can go up in value a lot over time.
Some collectibles have always done well, but their values can change quickly, just like valuable metals. You need to be patient, know a lot about collectibles, and maybe even put down a lot of money at the beginning.
This method could help retirees who like to collect as a hobby turn their hobby into a source of income, giving them both fun and a chance to make money.
7. Cryptocurrency: High Risk, High Reward
Finally, there’s cryptocurrency, a new type of asset that has become very famous but is often controversial.
Some investors, like Warren Buffett, are very skeptical of crypto, especially Bitcoin. Others, on the other hand, see it as a possible long-term source of value.
There’s no question that cryptocurrency is unstable, with big price changes and a lot of market speculation.
But people who support it think it has a lot of room to grow in the future. For people who are willing to take risks and can handle the ups and downs, cryptocurrency can be a unique, if risky, way to save for retirement.
But you should always be careful with crypto and only spend money that you can afford to lose.