Generally when you first start out investing you might seek the high risk, high reward gains from fledgling growth shares. After all, if things go wrong you have plenty of time to recover your losses.
But as you enter retirement I think these types of investments should take a backseat. Instead I would focus on investments that offer income and capital preservation.
Three shares which I think are perfect for retirees right now are as follows:
Challenger Ltd (ASX: CGF)
Demand by baby boomers for Challenger's annuities has been going through the roof. This week the company announced total annuity sales of $900 million for the March quarter, an impressive 53% increase on the prior corresponding period. As more and more boomers retire over the next decade, I expect demand for Challenger's products will continue to rise strongly. While its trailing fully franked 2.7% dividend may not be the biggest on the market, I do believe it has significant room for growth in the future.
Ramsay Health Care Limited (ASX: RHC)
In my opinion this leading private hospital operator is a great option for retirees. In the last 10 years the company has grown its earnings by a stunning average of 16.8% per annum. I expect similar growth over the next decade thanks to increasing demand for healthcare services due to ageing populations, increased chronic disease burden, and improvements in treatment and diagnostic methods.
Telstra Corporation Ltd (ASX: TLS)
Due to the sharp drop in its share price this year, I think the telco giant's shares are trading at an extremely attractive level. Although there are concerns that the launch of a fourth mobile network by TPG Telecom Ltd (ASX: TPM) could negatively impact Telstra, I think Vodafone and Optus are the two with the most to lose. So with its shares close to a five-year low and providing a trailing fully franked 7.3% dividend, I think now could be an opportune time to snap up Telstra's shares.
