Retirees should invest diversely

In all likelihood, the prices of goods and services will continue rising year by year.

When you retire, you may find that inflation becomes a bigger concern - which is why you'll need some investments with the potential for providing rising income during your retirement years.

Of course, as a retiree, you may feel that you need to invest more conservatively than you did when you were working. After all, you may think, you're no longer drawing a paycheck, so you can't really afford to take chances on investments that constantly fluctuate in value. Consequently, you may be inclined to stick with fixed-income vehicles, such as investmentgrade bonds and certificates of deposit (CDs).

However, bonds, CDs and other fixed-income investments carry their own type of purchasing power risk. Suppose, for example, that your bonds and CDs provide you with interest income of $1,000 a year. Even with a relatively mild inflation rate of 3 percent, your $1,000 will only be worth $863.00 in five years, and $744.00 in ten years. That's why you may want to consider dividend-paying stocks, which can provide you with the potential for rising income.

But in searching for stocks that pay good dividends, it's important not to be "short-sighted" and just go after those companies that seem to be paying the highest dividends at the moment.

This article appears courtesy of Edward Jones through an arrangement with local agent Randy Michaels.