You've built up a respectable nest egg for your golden years, and now it's time to take that gold watch and leave the old career behind. That doesn't make you any less of an investor, of course -- just a different one. Managing your assets after retiring can be tricky, but The Fool is here to get you started.
We asked a few of your fellow investors to share their best ideas for retired investors right now. Read on to see why they suggested trusting your nest egg to Adidas (ADDYY -0.28%), Welltower (WELL 0.56%), and the iShares Core S&P Mid Cap ETF (IJH 0.27%).
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Investing in a trend that will last decades
Jason Hall (Welltower Inc): For several years now, the oldest baby boomers have been reaching retirement age. This major trend will see some 3 million Americans turn 65 every year, on average, until 2030. It will also lead to a more than doubling of the number of Americans over age 80 within two decades.
Caring for, and providing comfortable and safe care and housing for, these seniors will require a massive expansion of facilities. Welltower is already one of the biggest and best-known real estate investment trusts (REITs) operating in this space, with 60% of its net operating income generated by senior-focused properties that it acquires and owns, leasing under long-term (think decades) agreements to healthcare-provider partners.
As a REIT, Welltower pays the vast majority of its profits in dividends, and has a wonderful track record of growing cash flows and payouts.
At recent prices, Welltower trades for around 17 times funds from operations, so it's not exactly cheap compared to its peers, or its recent valuations. But with a dividend yield near 5%, a strong track record of dividend growth, and a decades-long opportunity for expansion to meet a very critical need, it's a stock that should deliver fantastic returns and a wonderful income stream for 21st century retirees.
These 400 mid-cap stocks should serve you well
Anders Bylund (iShares Core S&P Mid Cap ETF): One way to keep your assets stable and secure for the long run is to bypass individual stocks. Instead, you can invest in large baskets of stocks where the gains and misadventures of any single ticker matters a lot less. And if you don't want to deal with the bureaucracy of trading mutual funds, an exchange-traded fund (or ETF) does the same job but in the form of an easy-to-manage ticker.
There are hundreds of ETF tickers on the market today, but I would like to highlight a particularly promising one for retirees with an eye for solid dividend payments. The iShares Core S&P Mid Cap EFT may be a mouthful, but it represents a tightly focused selection of mid-cap American companies.
The fund tracks the S&P MidCap 400 index and doesn't require hands-on research by the fund's own managers. This way, the fees and management costs are kept to a minimum, at just 0.07% of your invested dollars. With $41 billion of net assets under management and a 17-year operating history, this ETF is one of the largest and most solid ETF tickers on the market today.
The fund has delivered average returns of 14.8% over the last five years and 9.4% since its inception. That's good for a five-year doubling of your investment. Let me assure you that this focus on mid-cap tickers has paid off with market-beating returns in the long run:
On top of this, the iShares Core S&P Mid Cap ETF's dividend yields have varied between 1.1% and 1.8% since the end of the financial crisis in 2008-2009. That's actually impressive when you consider the constantly growing share prices. If you bought into this fund 10 years ago, you'd be looking at an effective yield of 2.8% today based on the current dividend payouts.
It's a low-risk way to tap into the very heart of the American economy, unlocking solid dividends along with healthy price growth. What's not to love?
Run, don't walk, into this stock
Dan Caplinger (Adidas): Retirees have long been aware of the trends toward a healthier lifestyle, and the athletic footwear and apparel segment has seen explosive growth for years now. Until very recently, U.S. companies were dominating the market for athletic wear, both in their domestic markets and internationally. Yet Adidas has bounced back, capitalizing on missteps from upstarts and taking a big chunk out of the business of its largest global rival.
The key to Adidas' revival was a change in leadership and a new strategic vision for regaining its past glory. Innovative products have helped Adidas make a dent in the basketball realm, which has traditionally been a key area for its U.S. competitors. At the same time, Adidas already had a major presence outside the U.S., and it has done a good job of consolidating its advantages abroad.
The company is also taking strides toward making its production process more efficient, and that could cut costs and widen margins in the long run. Adidas stock isn't the most liquid investment available because they don't trade on the New York Stock Exchange or the Nasdaq Stock Market, but if you think the company can keep its momentum going, it's worth the extra trouble to get into Adidas.
