Two tips for retirement investors-
1) Keep it simple and
2) keep your running costs down
That's how investing should be done. Sometimes investing can be as simple as buying and holding high-yield dividend stocks like IOOF Holdings Limited (ASX: IFL) and JB Hi-Fi Limited (ASX: JBH).
The more we complicate it, the more it can cost us in the long run. For example, self-managed super funds (SMSF) can be great investment vehicles, but they may not be for everyone.
You do get some tax incentives and advantages once you begin drawing off money for income in retirement, but it's a two-edged sword.
First, the annual management fees could start from $2,000, so if you have only $100,000 in the SMSF, there's 2% gone each year unless you add substantially to it. Regular super fund fees can be much less.
Second, even though you can hire an accountant to manage the paperwork, the fund holder is ultimately responsible for meeting all ATO requirements. Rulebreakers, even innocent ones, can face fines as much as $10,000. Ouch!
There are some super funds that allow holders to invest directly in ASX shares, but without the onerous rules and big costs of an SMSF.
Another tip for retirement investors- stick to quality companies paying solid dividends that grow steadily over time. It may be one of the best chances you have to hit your financial goals decades from now.
Here are two such stocks that could be paying you a reliable income over many years.
— IOOF Holdings Limited offers financial products and portfolio administration services like financial planning, investment trusts and trustee services. The stock pays a very big 5.8% yield fully franked. It is benefiting from the increasing popularity of super and annuities to help fund retirement, so while it gets a boost from its clients, you can get a boost from its performance over the long term.
— JB Hi-Fi Limited, the specialty electronics retailer, has a good record for dividend growth and currently offers an attractive 5.6% fully franked yield. Retail is not really strong right now, but the company is getting a lift from the growing housing market. Homeowners are buying household goods and furnishings like appliances and whitegoods along with the must-have electronics like new Apple products, Microsoft tablet PCs and gaming consoles. The company may have a better-than-expected merry Christmas this shopping season, so watch for trading updates.
