The current investment climate makes it difficult for retirees to know what to do with their money. Interest rates are at all time lows, volatility is picking up and house prices are starting to go down.
I think shares are the way to go, but investors need to be careful about what shares they choose.
Some people may be looking at getting an annuity from Challenger Ltd (ASX: CGF) but a better idea could be just to invest in the company itself. It is generating good growth each year as other retirees are looking for a reliable source of income from their capital.
Today, the company announced that its normalised profit was up 6%, its assets under management (AUM) was up 18% and the dividend increased by 3%.
Challenger has long-term tailwinds thanks to Australia's ageing tailwinds and the growing superannuation pool due to the compulsory contributions.
Another good choice for retirees could be WAM Capital Limited (ASX: WAM). The way it operates makes it almost made for retirees. The investment team at Wilson Asset Management have a strong record of outperforming the market and paying a lot of that profit out as a growing dividend each year.
Earlier in the week, WAM Capital increased its dividend by 3.33%. It could be a good way to ride out the market because the investment team always keeps a good amount of cash on hand for protection and investment opportunities.
A third good choice could be Rural Funds Group (ASX: RFF). It owns farmland and leases it to high quality tenants whilst also providing water entitlements for them to use.
Farmland has always been a useful asset and should continue to be a good asset for decades to come. Rental indexation is built into all of Rural Funds' contracts, so it should be able to keep growing its distributions.
Foolish takeaway
All three are excellent choices for retirees in my opinion. I also believe that all three will beat the market over the long-term, which is why I'm a shareholder in all three of them. At the current prices it's hard to pick a winner, but it's hard to look beyond WAM Capital's dividend and investment pedigree.
