How Income-Producing Assets Can Help You Overcome a Crushing 2022

Retirement investing planning means thinking long term. It means planning for a future that could be years or even decades away, but the future is always unpredictable. 2022 has continued to show us that no one really knows what the global economy will do — there are just too many moving parts. 

This is why it’s important to diversify your portfolio and include income-producing assets in addition to traditional assets like stocks, bonds, and mutual funds.

The point of strategic investment planning for retirement is to have a stable and reliable income when you exit the workforce. Money is the last thing you want to worry about when enjoying your retirement, yet people who only focus on growth stocks are finding themselves with less income than they expected.  

Global events can have a shocking economic effect, and often those events are completely out of our control. This can have a surprising impact on your plans for retirement and can leave you with fewer funds at your disposal. 

When we get right down to it, cash is king. Having a steady flow of cash is essential for retirement planning, especially when things are as volatile as they are now. Though stocks and bonds can be great for growth, the return on those types of investments becomes uncertain when the economy is in turmoil.

The Effects of Market Volatility on Retirement Investments

National economies are no longer isolated. The world is connected, and what happens on one side of the globe can profoundly impact what happens on the other. In 2022 we continue to experience uncertainty from the pandemic. New variants keep popping up and causing new waves of disease that have businesses constantly rethinking safety procedures.

Closures and slowdowns caused by quarantines continue to affect the supply chain. As supply has waned and demand has risen, we’ve seen an increase in prices for everything from food to gasoline. 

These rising costs have an effect on business growth. Businesses need more cash on hand to cover operating costs or account for inflation. Instead of focusing on growth, they’re focused on consolidation. This means gains will be modest at best, and this has a direct effect on the stock market. 

On top of all that, there’s the crisis in Ukraine. Russia’s invasion has caused uncertainty throughout Europe and has put stable nations on edge. This has also contributed to a slowdown in the stock market as investors wait to see how things will unfold. 

All of these events are completely outside your control, but they could have a lasting impact on the income you expect to have in retirement from your investments. 

If you’re invested only in traditional stocks and bonds, you could be seeing much less of a return than in previous years when you actually need to access your cash. And even if returns stabilize, the purchasing power of your dollars may shrink due to rising inflation from all these combined global factors.

Continuing Unpredictability in 2022

The past couple of years have made it obvious that no one can predict where the global economy will go. One minute you might be feeling safe and secure with your investments, and the next it can all come crashing down because of things outside your control. This is why it is so important to plan for any possible future. 

2022 has continued the trend of uncertainty and volatility that began in 2020. Global events continue to rock the markets and make investing in traditional stocks and bonds unpredictable. For years, these types of investments were considered the most reliable and had steady returns that people could count on. The growth seen in some of these assets was thrilling, and people were excited for a lucrative future.

But with the market cooling down, and a potential recession looming on the financial horizon, these growth assets have stagnated. This leaves people in retirement or close to retirement struggling with fewer funds if they haven’t balanced their portfolio with income-producing assets.

You may have heard the saying, “Don’t put all your eggs in one basket,” and this is very true when it comes to retirement planning investing. A diversified portfolio is a great start, but you also want to consider multiple types of assets. When you diversify into multiple types of assets, your retirement income isn’t as likely to be devastated by unexpected global events. 

Shift Your Investments for Retirement Planning

If the thought of all this uncertainty and diminishing returns on your retirement investments has you beginning to panic, then it may be time to change your strategy. Instead of focusing on traditional growth assets that aren’t actually growing right now, it’s time to focus on income-producing assets.

Income-producing assets such as real estate can put money in your pocket right away. While growth assets are appealing for their potential future payout, many people don’t understand how many variables go into determining how large that payout will be. And with the current global volatility, that payout is shrinking instead of growing.

This is why savvy investors are shifting their retirement planning investing to the assets that pay an immediate income. Having cash on hand gives you more options. You can use that income right away or reinvest it. Having that flexibility is essential during times of economic turmoil and can bring some much needed peace of mind. 

These types of investments aren’t flashy, and they don’t generate the headlines or excitement of growth stocks. But they do provide a consistent cash flow that will help keep you secure in retirement. Consistent income is what you need in retirement, and no matter your plans, you should always have a diversified portfolio that balances different assets.

How Chicago Trust Administration Services Can Help

Navigating all of this may seem complicated and maybe even panic-inducing. After all, it’s your retirement. You’ve been planning it for some time, and it should be to relax and enjoy life, not stress about your income. 

This is where the team at Chicago Trust Administration Services comes in. We’ll help you with the ins and outs of a self-directed IRA that gives you more flexibility with your investments for retirement planning. We have the experience to help you navigate the legalities of a self-directed IRA so you can make the alternative investments you want. 

When you have a portfolio that includes income-producing assets, you can be better prepared to ride the ups and downs of a volatile market. To see how we can help, we invite you to schedule a complimentary meeting with us by calling 312-869-9394 or emailing steve@ctasira.com.

___________________________________________________________________________

*The content and opinions in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

**CTAS professionals are not financial advisors and cannot provide advice or recommendations regarding specific investment decisions.