It seems that investors are always on the hunt for the next 10x stocks, relying on long time horizons to deliver massive results. But if time isn’t on your side, these speculative bets may not be worth it. For older market participants, safety is much more important. That’s where safe investments for seniors to consider comes into focus.
During an investor’s younger years, financial advisors typically recommend gearing portfolios toward higher-risk, higher-reward profiles. Should circumstances not pan out favorably, the younger investor has time as an asset. Unfortunately, the same cannot be said of older demographics.
Here, the narrative zeroes in on safety and stability. Rather than attempting to acquire moonshots, retirees prefer to have money coming in with the occasional chance for capital gains. Therefore, safe investments for seniors to consider usually revolve around ideas with proven track records.
For this list, I’ve compiled an eclectic series of publicly tradable assets. From individual stocks to mutual funds, these ideas could help foster a less-eventful retirement. So, without further delay, here are the safe investments for seniors to consider in 2022.
| DUK | Duke Energy | $110.85 |
| COST | Costco | $540.50 |
| VOO | Vanguard 500 Index Fund | $379.87 |
| SCHD | Schwab U.S. Dividend Equity ETF | $75.56 |
| DODIX | Dodge & Cox Income Fund | $12.68 |
| VIPSX | Vanguard Treasury Inflation-Protected Securities Investor | $13.11 |
| VTR | Ventas | $48.39 |
Duke Energy (DUK)
When people think about safe investments for seniors, more often than not, utilities come to mind. Fundamentally, utilities represent the stagehands of the rapidly evolving technology-centric economy. From cloud computing to electric vehicles to even the blockchain, none of these innovations will go anywhere without power.
Therefore, I’m a big fan of Duke Energy (NYSE:DUK). At a time when the benchmark S&P 500 index is still down 10% for the year, DUK is up more than 8%.
Most importantly under the context of safe investments for seniors, Duke operates where people are moving to. For instance, the company’s coverage map includes the Carolinas. Sure enough, this region represents a popular destination spot for millennials. Therefore, you can easily bank on Duke’s ties to powerful demographic trends.
Costco (COST)
What this year has clearly demonstrated to investors is that few equity ideas offer safety and stability. For instance, one of the titans of retail, Target (NYSE:TGT), suffered immensely this year. While I can’t quite say that Costco (NASDAQ:COST) is in positive territory for the year so far, at a 5% loss, it’s not performing badly under a broader context.
Over time, however, COST is a name that belongs on a list of safe investments for seniors to consider. Mainly, it’s one of the few businesses that will likely suffer the least should a recession materialize. To be clear, extended downturns invariably affect all businesses. Nevertheless, just like in warfare, the grunts tend to suffer the first and most voluminous casualties.
Continuing the military example, Costco is a two-star general.
Further, given that the company aligns with a high-income customer base, COST offers a dependable profile. You’re not going to get rich with Costco. However, it will likely keep your head above water.
Vanguard 500 Index Fund (VOO)
Moving over into the world of exchange-traded funds, the Vanguard 500 Index Fund (NYSEARCA:VOO) offers an excellent idea for safe investments for seniors. Designed to track the performance of the S&P 500, the VOO ETF comes off as rather vanilla. Still, when you’re talking about your golden years, vanilla isn’t a bad hue for your portfolio.
Of course, let me address the giant pink gorilla in the room. Because the VOO tracks the S&P 500, this ETF is down double digits for the year. Nevertheless, investors should take to heart the Oracle of Omaha Warren Buffett’s words: Never bet against America.
Through ownership of the VOO, investors get the best this country has to offer. Its top three holdings are Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). Further, setting aside its most dominant weighting to technology at 25.3%, the Vanguard 500 is well balanced among the other sectors.
Schwab U.S. Dividend Equity ETF (SCHD)
With capital returns hard to come by during these strange times, many folks have turned to passive-income-generating assets. What makes the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) an interesting idea among safe investments for seniors is its simplicity. As an ETF, all one needs is a trading account and you can start picking up shares right away.
Further, the objective behind the SCHD fund is extremely straightforward. Tracking the performance of the Dow Jones U.S. Dividend 100 Index, this ETF focuses on fundamentally strong companies with a history of consistent dividend payouts.
The fund’s top holdings include Texas Instruments (NASDAQ:TXN), PepsiCo (NASDAQ:PEP) and Home Depot (NYSE:HD). In terms of weighting, financial services dominate the SCHD at 20.8%. Industrials and technology round out the top three at 16.7% and 16.4%, respectively.
Finally, the SCHD presents an excellent cost profile for retirees with an expense ratio of 0.06%. This metric compares very favorably to the category average of 0.38%.
Dodge & Cox Income Fund (DODIX)
Pivoting over to the mutual fund side of things, an ideal choice for safe investments for seniors is Dodge & Cox Income Fund (MUTF:DODIX). Usually, one of the key differences between mutual funds and ETFs is that the former tends to be actively managed. That’s the case with the DODIX fund, allowing stakeholders to enjoy the benefits of the brightest analytical minds.
Further, per U.S. News & World Report, “Morningstar calls the fund ‘one of the best,’ saying the fund’s experienced management team brings a ‘thoughtful’ approach to investing and reasonable expenses in support of this.”
In terms of asset allocation, the DODIX concentrates mostly on domestic bonds at 75.3%. Next is foreign bonds, which represent a 15.6% allocation. As well, cash represents 6.2% of the portfolio, reflecting this mutual fund’s focus on stability.
Finally, the DODIX’s net expense ratio amounts to 42 basis points. While higher than many ETFs, the DODIX comes in well below the category average of 75 basis points. Its management fee is 0.4%, right on the category average.
Vanguard Treasury Inflation-Protected Securities Investor (VIPSX)
With rising inflation continuing to take a bite out of household earnings, it’s no wonder investors are looking to mitigate the pain. For this, one of the best ideas for safe investments for seniors is the Vanguard Treasury Inflation-Protected Securities Investor (MUTF:VIPSX). The bottom line here is that this mutual fund holds TIPS, bonds indexed to inflation.
Essentially, as inflation increases, the principal value of TIPS does as well. Among publicly traded assets, VIPSX offers a very straightforward mitigation tool.
Further, I included the mutual fund on this list of safe investments for seniors because inflation could linger. Keep in mind that our economy incurred an unprecedented acceleration of money stock volume. Therefore, it may take years for the Federal Reserve to work down this excess. Plus, the unexpectedly strong jobs report suggests that the Fed will be wrestling with inflation for a long time.
The VIPSX features a net expense ratio of 20 basis points, well below the category average of 0.62%. Also, management fees come out to 19 basis points, again below the category average of 0.32%.
Ventas (VTR)
Finally, to conclude this list of safe investments for seniors, we’re going back to the equities sector with Ventas (NYSE:VTR). Structured as a real estate investment trust (or REIT), Ventas focuses on the healthcare and senior living industries. According to Kiplinger, VTR is one of the best such REITs, commanding more than 1,200 separate properties. About 53% of its portfolio centers on senior housing while the entity earmarks 20% for medical office buildings.
Fundamentally, Ventas benefits from one of the profoundest demographic trends in history. Following World War II, the baby boomers represented a massive increase in the U.S. population. They were the largest adult population until millennials surpassed them in July 2019. Now, the narrative concentrates on taking care of the boomers in their golden years.
Basically, Ventas is a full-circle idea for safe investments for seniors. It’s for retirees, by retirees. With a comparatively solid performance in the open market and a 3.74% forward yield, VTR is certainly something to consider.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.