The Best $1,000 Boomers Can Spend on Their Investment Portfolio This Year

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Many boomers are in or near retirement, which means every investment dollar counts. Unlike younger generations who can afford to take bigger risks and ride out market swings, boomers need a balance of growth, income and security.

If you have a spare $1,000 and are wondering where to put it to work, here are five options that protect capital and potentially generate steady returns.

Certificates of Deposit

If you want safety and predictability, putting $1,000 in a certificate of deposit (CD) is an excellent option. A CD lets you lock in your money for a set period of time in exchange for a guaranteed fixed interest rate. Most banks and credit unions offer CDs and are insured by the Federal Deposit Insurance Corporation (FDIC), meaning your money is safe.

Unlike putting this cash in a regular savings account, you’ll enjoy higher interest rates with a CD. However, you won’t be able to access the funds until maturity. Withdrawing before it matures often results in a penalty. 

Treasury Bills, Notes and Bonds

Treasuries are another safe investment option for boomers. Backed by the U.S. government, they’re one of the safest investments in the world. Treasury bills (T-bills) are short-term securities maturing in one year or less, while notes and bonds have long-term horizons.

For a $1,000 investment, T-bills are appealing. You purchase them at a discount, say $850, and when it matures, you receive the full $1,000. Treasury bonds and notes, on the other hand, may be a good choice if you want dependable interest payments every six months over several years.

Target-Date Funds

Like CDs and treasuries, which are hands-off, target-date funds automatically adjust your asset mix based on your retirement date. The primary advantage of target-date funds is that you don’t need to rebalance your portfolio. The fund does it for you. You can buy target-date funds through a brokerage or retirement account. 

Keep in mind that expense ratios vary, and over time, such fees can eat into returns. Still, target-date funds are a strong option, especially if you’re looking for a set-it-and-forget-it investment aligned with your retirement.

Annuities

Want guaranteed income in retirement? Annuities may be a great option. By investing in an annuity, you hand money over to an insurance company, which then promises to pay you either immediately or at a later date.

A grand won’t buy a large annuity contract, but can still generate a small return. Immediate annuities start paying out right away, while deferred annuities grow tax-deferred until you begin withdrawals.

The downside is that many annuities come with high fees, surrender charges and terms that can be difficult to understand. 

Index Funds and ETFs

If you still want exposure to the stock market without taking on too much risk, index funds and exchange-traded funds (ETFs) are excellent choices. These funds track market indexes, such as the S&P 500 or a total stock market index.

Unlike individual stocks, which can be risky if a company struggles, index funds spread your investment across hundreds or thousands of companies. ETFs also provide flexibility — you can buy or sell them anytime during market hours, giving you liquidity access whenever you need the funds.

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