Retirement savings accounts are nest eggs that we build up so that when we the time comes for us to quit the world of employment, we can all spend the rest of our lives living comfortably and with little worries. Before we reach that time, however, we try to get our earnings and savings to grow as big as they can. To that end, retirement plans always come with investment options. Individual Retirement Accounts and 401K plans exist to provide us with a way to save money and invest it to make it grow at the same time. Some of the best investments come in stock funds or the more risky growth funds.
What are growth funds?
Growth funds are mutual funds whose sole goal is to put together a portfolio of diversified stocks which earns profit through capital appreciation. Money managers take care of investing the stocks and also do business for money market investing. Growth mutual funds are fantastic but incredibly risky choices for investments. 401Ks are, in particular, used for investing in stock funds or growth equity funds.
A new sort of product was launched by fund companies in the past year or so. They’re called Retirement Income Funds. Retirement income is money paid to you through investment capital gains. They’re usually used as padding or gap investments for the time between early retirement and before Social Security benefits kick in. A growth fund is the most risky of the three investment strategies: growth, value, and blend. A retirement income coming from an income growth fund means that it’s an investment which has a very high risk/reward ratio. It is a high return investment but it also goes down steeply in bear markets or downturns. Growth potential for companies is what’s invested in for the portfolio. Active stocks like this are popular with investors and managers often choose wisely and carefully.
Growth Funds as Retirement Investments
Fund companies that have released options for Retirement Income Funds are Vanguard, Schwab, Fidelity, and John Hancock. They have variations for distribution and acquisition of retirement income but the concept for them all is the same: retirement investment in growth funds can be profitable and might actually be less risky for retirees than regular employees. How you use growth funds and how you invest in them are subject to your imagination. Mutual funds like money markets may provide stable income or earnings but they can’t beat what you might get from investing in growth funds.
There is another type of growth funds called Aggressive Growth Fund. It is, as the name might imply, a mutual fund which aims to achieve the highest possible gains from an investment. Target companies that are included in these kinds of portfolios are those with very high growth potential which also includes volatile price changes. This is has an even higher risk though still with the same high return investment.
Growth funds have a very distinctive trait of going as high as they can go and then falling harder than anything else on the market. This goes double for aggressive growth funds. Only those investors willing to participate in high-risk ventures should dabble in these areas.