We know about the 401(k) and Roth IRA, but there are other ways to save for retirement too. Finding lesser-known ways to invest can help make your retirement savings stronger and your finances more secure.
In this article, we’ll talk about four little-known ways to save for retirement. These options can help you build a better financial future.
4 Retirement Strategies You Need to Know
1. Health Savings Account As a Retirement Vehicle
Many people think of Health Savings Accounts (HSAs) as only for medical costs, but they’re actually great for saving for retirement too.
HSAs have three big tax benefits: what you put in is tax-deductible, the money grows without being taxed, and you don’t pay taxes when you take it out for medical expenses.
Once you’re 65, you can use HSA money for anything without a penalty (though you might have to pay regular taxes if it’s not for medical stuff). This makes HSAs a smart choice for retirement savings, especially if you have good health insurance.
You can make your HSA grow even more by investing some of the money. Even though most HSAs start with just cash, some let you invest in things like stocks and bonds. By doing this and adding money regularly, you can build up a big pot of money for retirement that’s also tax-efficient.
2. Real Estate Crowdfunding
Traditional real estate investing often needs a lot of money and takes up a ton of time. But now, thanks to real estate crowdfunding platforms, regular folks can join in with less cash and fewer hassles.
Real estate crowdfunding means putting money together with other investors to support different real estate projects, like homes or shops. These platforms let you spread your money across many properties and places, which lowers the chance of losing money and boosts how much you could make.
Another cool way to invest in real estate without being a landlord is by getting into REITs, or Real Estate Investment Trusts.
REITs let people invest in real estate without actually owning any properties themselves. Instead, they pool money from lots of investors to buy and manage different types of real estate, like offices or malls.
These investments have to pay out a big part of their profits to shareholders as dividends, which is great if you’re looking for regular income.
Investing in REITs has lots of perks, like spreading out your risk, being able to buy and sell easily, and having pros handle the properties for you.
Plus, since REITs are traded on big stock markets, it’s easier to turn them into cash compared to regular real estate. And with experts taking care of the properties, you can enjoy the benefits of real estate investing without all the hassle of managing it yourself.
3. Self-Directed IRAs
Regular IRAs don’t give you many choices for investing, but a Self-Directed IRA (SDIRA) changes that. It puts you in charge of where your money goes.
With an SDIRA, you can invest in lots of different things like real estate, private companies, even precious metals.
This flexibility means you can spread your money out more, which might mean you make more in the long run.
But remember, having an SDIRA also means you have to be careful about following the IRS rules. Messing up could mean you get hit with penalties or lose the benefits of your account.
4. Royalty-Based Investments
Investing in royalties is a different but interesting way to save for retirement. Royalties are payments made to creators or owners of things like patents, copyrights, or mineral rights.
When you invest in royalties, you get a piece of different industries like entertainment, tech, or energy, without having to deal with the day-to-day stuff that usually comes with those investments.
Usually, royalty investments bring in a steady stream of money, which can be a reliable source of income when you’re retired. Plus, since royalty assets can go up in value over time, there’s a chance your investment could grow.
While it’s good to stick with the usual retirement plans like 401(k)s or IRAs, checking out these less common strategies can give you more chances to make your money grow and diversify your investments.
Health Savings Accounts, real estate crowdfunding, Self-Directed IRAs, and royalty investments all have their own perks. By combining them smartly, you can boost your financial security in the long run.
Before jumping into any of these, make sure to do your homework, talk to financial experts, and think about how much risk you’re comfortable with. Taking charge of your investments now can set you up for a better and less stressful retirement later on.
