Why you must focus on dividends if you're investing for retirement

by , 20 November 2015

Your retirement isn't going to be cheap. Chances are you're going to have a couple of decades to enjoy it.

So if you're looking towards planning for retirement and want to invest on the stock market, what sort of stocks should you invest in?

Read on to find out…


The challenges of retirement

 
Funding your retirement will come down to your pension and financial assets you’ve accumulated over the years.
 
With life expectancy rising, you’re going to need to have enough cash to fund your retirement for perhaps longer than you first thought.
 
So putting some of your money into the stock market to work is a good way to add to your retirement funds later in life.
 

So what sort of stocks should you buy?

 
Why you should invest in stocks paying dividends
 
Stocks that pay dividends, Alexander Green in Investment U explains. Over the long run, dividend paying stocks outperform all other asset classes. 
 
When the stock market falls, stocks that pay dividends tend to perform better than stocks that don’t pay dividends. This is because many dividend paying companies are mature, money making companies with staying power.
 
If you’re looking for a way to boost your retirement pot, start investing in great dividend paying stocks. You can reinvest your dividends until you need the income from your stocks or decide to sell some of your holdings.
 
The one thing you have to bear in mind is that there is always the chance of a stock market crash. This could happen just before you planned to sell your stock. You need to anticipate this and plan for it too. If you plan just to take the dividends as income, you can ride these dips out.
 
So there you have it. Why you must focus on dividends if you’re investing for retirement.
 
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