Traditional Government bonds: The iShares Barclays 20 Year Treasury Bond ETF will let you buy long-term Treasury bonds, which carry a government guarantee of repayment. Still, with interest rates at near all-time lows, long-term bonds carry significant duration risk and could lose significant value as a result. These days, shorter-term bonds generally don’t pay enough to beat inflation, much less cover inflation and taxes and provide real returns.
Inflation-protected bonds: The iShares Barclays TIPS Bond ETF will let you buy bonds with a government repayment guarantee that also step ups due to inflation. But the rates on new inflation-protected bonds are currently negative, which means those bonds provide little more than a guarantee that you’ll lose money in real terms over time.
Real estate: The SPDR Dow Jones Real Estate ETF will let you buy a broad swath of Real Estate Investment Trusts. And while it’s generally true that they’re not making any more land, recall that it was a real estate crash that precipitated the financial meltdown that knocked down the global economy just a few years back.
Still — investing is your best long-term bet
In spite of those very real risks, investing for your retirement over the course of your career still beats the daylights out of not investing at all. And by regularly consulting a retirement calculator to make adjustments while you work through your plan to get from here to retirement, you can best position yourself for long-term success. As the EBRI’s report shows, that combination can work wonders.
The article 1 Simple Step to Dramatically Improve Your Retirement originally appeared on Fool.com and is written by Chuck Saletta.
Fool contributor Chuck Saletta has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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