Retirement planning is no longer just a matter of sitting back on your pension and social security benefits. Today, most people look to supplemental retirement plan options to ensure they can live in comfort for years to come. In addition to a 401k plan, stocks and mutual funds are among the most important retirement planning tools.

A stock is a share in the ownership of a company. For the company, a stock is a fundraising loan that they needn’t repay, but will typically yield greater income for both the company and its shareholders in the end. As an owner, you are entitled to your share of the company’s wealth.

You won’t be able to control how the company is run per say, but the good news is that you will have a claim to assets and limited liability (meaning that you’re not personally responsible if the company can’t repay its debts). Stocks can be daunting since there’s always the risk that the company won’t be profitable and you’ll lose your investment. When retirement planning, the AARP recommends investing for the long haul in companies that are likely to succeed (instead of trying to “time” the market) and invest small in many different stocks to minimize risk and maximize returns.

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This entry was posted on Saturday, October 6th, 2007 at 9:24 pm and is filed under Financial Services. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.