The year 2021 has begun with increased attention and scrutiny on the stock market. As shenanigans around short selling have threatened Wall Street, many would-be investors are reconsidering the financial instruments they rely upon to guarantee their retirements. The thought of losing everything in the stock market is mortifying, especially to those who are merely trying to amass a modest sum for their golden years. Fortunately, the market volatility that we see in mass media does not extend to every avenue for investment. Here are some safe investment ideas for the middle class that will grow money for retirement without placing your money in great jeopardy—though, of course, no investment is entirely free from risk.
When pro-business legislators wanted to reinstate the tax breaks of the traditional IRA, they had to get creative as part of a compromise. The advent of the Roth IRA changed the game for middle-class investors by inverting the typical taxation model of IRAs. By taxing contributions before withdrawal rather than after, investments in a Roth IRA grow tax-free, and withdrawals will be untaxed income as well. Roth IRAs allow middle-class investors to make modest contributions to their retirements during their working years by capping contributions below traditional IRAs.
Owning and managing property isn’t just for the wealthy. By identifying undervalued real estate and putting in the requisite work, you can create a reliable investment asset. By setting up a self-directed IRA, you can place real estate in your retirement portfolio and keep your earnings from this enterprise dedicated to retirement, where it can grow under excellent custodianship.
Playing the stock market is tricky. It is, in many ways, like going to a casino. Index funds, however, mitigate many of the ups and downs of stocks. An index fund is essentially a way to buy stock in a little bit of everything. The outliers cancel each other out and traditionally leave investors with modest growth, making index funds a safe middle-class investment idea for families reluctant to risk everything in the vagaries of the stock market.