When it comes to retirement, we all like to think of long extended holidays and vacations in the Caribbean. How far, or not, is that from the truth? Only those who have retired can say.

Retirement isn’t an end, like many people assume it is, but merely the start of a new stage in your life.

Most of us subconsciously assume that our work lives will go on forever, and so when it finally ends, a majority aren’t prepared for what comes their way. But we still plan and save up for our retirement day. Most adults between the ages of 30 and 45 have a stable savings account, or a running fixed deposit (FD) account of over a decade or so. We make our own attempts to save up for when monthly income becomes a thing of the past.

Investments using your retirement money are slowly gaining popularity today. You might wonder why anyone would want to invest the money they’ve saved up all through their lives, but this is a trend that a lot of people want to be a part of.

If you’re among those who wish to know where and how to invest your retirement money, read on to find out.

Investment options for retirement money

When coming to a decision regarding your retirement money, it’s important to ensure that no risk is involved—this is your nest egg, after all. It cannot be treated as a gamble, like when the investor is middle aged, simply because you won’t be left with much to fall back on.

Needless to say, it isn’t a time for experiments or trying out new ways without an assured guarantee of their success. Ultimately, it’s crucial that you make an informed decision regarding where your retirement money goes.

This is the money that is going to support you and your spouse during your older years, so keep in mind what your needs will be, and invest in accordance to the results and returns you will be requiring. There are three broad categories of investment—stocks, bonds, and cash.

An ideal retirement investment account should be a mix of the three, depending on your financial goals, risk tolerance, and asset management capabilities. However, if you prefer any one method over the others, feel free to make that choice. The final decision ultimately depends upon you.

1)    Stocks

These probably yield the highest results over time, and provide long-term growth. Buying stock is basically buying a share of ownership in a corporation. You will be sharing the profits—and losses—accrued by the corporation in the stock market.

This form of investment takes extensive research—you’ll need to understand the corporation or company you wish to invest in, and read all investment-related documents with care and precaution.

Clear out all your doubts before the actual investment, so as to secure your position. Before you invest, keep in mind that stock investments are volatile, and may take huge damage in a short time span.

2)    Bonds

These are interest-bearing loans made to banks, NBFCs (non-Banking Financial Companies), or the government. The investor is the lender here, and the amount is kept in the bank/NBFC/government account depending on a pre-decided tenure and interest rate.

This form of investment gives assured returns over a period of time. The lender/investor has more control over their money than in other investments.

It’s the ideal choice if you have a considerable amount of time before you will need returns on the invested amount. These essentially option like a long term Fixed Deposit and the like. It seems intimidating, but with the help of online tools such as an FD interest calculator, the process becomes a whole lot easier.

3)    Cash or cash equivalents

This is the least risky of all of the investments, and works in the form of assets. However, be warned: it also offers some of the lowest returns of all the investment types we’re talking about here. It involves investing money in materials that increase their value over time; such as real estate, or precious ornaments and metals.

This, understandably, is a tricky technique to work with. You’ll need to know what does not classify as a measurable asset. Anything that decreases in value over time, due to usage or degradation, cannot be considered an asset. Your TV, or car, and other such possessions do not count as assets for instance—since they’re not going to yield any returns in the future.

Which investment style suits you?

Now that you know all about of the investment options available to you, you’ll need to learn which one best suits your needs. The maximum benefit that any of these investment methods can get you, depends upon the time you have on your hands for the returns.

It’s evident that each of these methods give you returns in vastly different tenures. For instance, if you have only half a decade or so, stocks would be your best bet, since you’re not in a position to negotiate for lower risk due to the short time.

If you’ve got a decade or two, then it makes sense to go for FDs or cash equivalents. The choice is all yours. You can even go in for a combination of all three to ensure guaranteed returns.