Seniors have unique needs when it comes to income and cash flow. Without the promise of a steady paycheck, many seniors must rely on the savings they have accumulated through the years to provide the cash they need to pay bills and enjoy the lifestyle they desire. That is why it is so critical for seniors to structure their investments to provide the highest cash flow at the lowest possible risk.
Certificates of Deposit
Certificates of deposit from the bank have a number of important advantages, including safety, stability and predictability of earnings. With a CD from the bank, seniors know exactly how much they will earn during the life of the investment. This makes it easy to structure the payments and predict the cash flow from each CD. Seniors who choose to invest in CDs just need to make sure their total investments are under the federally insured limit of $250,000 per account.
Seniors and others can invest directly with the U.S. government by setting up an account at TreasuryDirect.gov. Once the account is open, seniors can purchase Treasury notes, Treasury bills, savings bonds and other investments directly from the government, without paying any commissions or fees to a broker.
Dividend Paying Stocks
Dividend paying stocks are often a good choice for seniors. The dividends paid on the stocks provides a steady stream of income, while the stocks themselves have the potential to go up in value. Seniors can choose their own stocks based on their dividend yields, or they can choose a mutual fund made up of high dividend stocks. The mutual fund option provides seniors with a good level of diversification, as well as professional management of their funds, but it is important to choose a fund with low fees and expenses.
Bonds funds can be an excellent way to earn interest and provide cash flow. Seniors have many different bonds to choose from, and most major mutual fund families offer at least a few of these funds. When choosing a bond fund, be sure to look at the makeup of the fund. A bond fund that holds a lot of high yield corporate bonds might be too risky for seniors whose primary goal is to keep their money safe and provide current income. A bond fund that limits its holdings to government bonds would be less prone to price fluctuation and potential losses.