How should you invest your money for retirement? Or what’s the best course if you’re already retired and living on a fixed income? While the same answers won’t work for everyone, following certain investment principles may help you sustain a comfortable, secure life after work.

During retirement, generating income is crucial, and it may make sense during these “fixed-income years” to have a portion of your assets in bonds, dividend-paying stocks, certificates of deposit (CDs), annuities, and other investments that deliver predictable payments to replace the salary you no longer receive. Yet you also need to stay ahead of inflation, and so most retirees invest a portion of their portfolios in commodities and real estate, which tend to increase in value when consumer prices rise. The mix you choose depends on how old you are, how much you’ve saved, how much risk you can tolerate, and other factors, including the state of the economy. You should reassess your circumstances periodically and make adjustments if things have changed.

Use this quiz to see how attuned you are to a few of the finer points of retirement investing. If you have questions about the answers or would like to discuss your own strategies, please give us a call.

1) Which of these investment strategies makes sense when inflation is on the rise?

a) Invest in bonds that all mature at the same time. 
b) Invest in commodities. 
c) Sell gold. 
d) Sell Treasury Inflation-Protected Securities (TIPs).

2) Which of these may help if the economy falls into a deflationary spiral?

a) Invest in long-term Treasury bonds and bond funds. 
b) Invest in high-yield bond funds. 
c) Sell long-term CDs. 
d) Sell stocks.

3) As you near retirement, which of these factors becomes least crucial?

a) Asset allocation 
b) Risk tolerance 
c) Your timetable for tapping your nest egg 
d) High-yield opportunities

4) Which of the following is generally not considered a reliable fixed-income investment?

a) Bonds 
b) Fixed annuities 
c) Preferred shares of stock 
d) Gold and silver

5) If you sell a bond whose credit quality has been downgraded, which is most likely to happen?

a) The market price will be higher than the price you paid. 
b) The market price will be lower. 
c) The market price will be the same. 
d) The market price will be fluctuating wildly.

6) Buying and holding bonds with a range of maturity dates is a strategy often known as:

a) Barbelling 
b) Bulleting 
c) Laddering 
d) Asset allocation

7) The maximum age for investing in a Roth IRA for retirement is:

a) 59½ 
b) 65 
c) 70½  
d) There is no age limit.

Answers: 1-b; 2-a; 3-d; 4-d; 5-b; 6-c; 7-d