When preparing yourself for retirement, you may have different options that you have considered in order to secure your retirement savings, and one of the most common retirement investment options that people go for is the stock market.
However, now that U.S. stocks are plummeting, many retirees are starting to doubt the stock market as they worry about having a high equity weighting in their stock portfolios. The thought of working hard saving up for your retirement just to see yourself slowly losing your savings could feel very devastating.
Everyone is uncertain of when the market recovers from the COVID-19 pandemic which is causing the global economy to rapidly shrink. With the crash of the stock market, the best thing to do is to thoroughly think if you ought to continue your current retirement strategy, or you should leave the stock market for good.
Consider a Zero-Investment Portfolio
If you avoid the stock market, you will no longer experience another market turmoil again. Having a zero-investment portfolio may be the answer now that interest rates are lower than ever.
Now, a 10-year Canadian government bond no longer pays an annual rate of 1 percent. GICs may be a somewhat better option, but the rates have also become lower since interest rates have been cut.
You also need to remember that these products have interest taxed at the full minimal rate. Still, dividends get way better tax rates.
However, a 1-2 percent rate of your investment returns is not enough for your retirement savings. This could probably work for you and your spouse if you are both eligible for a Canada Pension Plan or Old Age Supplement pensions, but this isn’t the ideal solution.
Invest in a More Conservative Stock
If you still want to be in the market, do not pushing yourself into having a portfolio with heavy equities will not do you good. Try buying the most conservative stocks, and top it up with a healthy bond component if you can.
Rogers Sugar (TSX:RSI), a Canada based sugar producing company, is an ultra-conservative stock that retirees may invest in if they want to preserve their capital. The company’s market nature and its popularity among Canadian consumers make the company well-performing. Rogers’ shares currently have 7 percent returns, and that is something they have impressively maintained for more than 10 years, making it a good choice for gaining income.
Even though the company has received poor results after acquiring its maple syrup division showing that Rogers was paying out more money than it earned, the company’s future has improved. As analysts projected, in 2020, Rogers will earn around $0.40 per share, which means they can still afford their annual dividend of $0.36 per share.