As an investor looking for retirement stocks, you should incorporate a different mindset than when you look at other investment opportunities. Assets that you pick for your retirement fund need to be chosen because they have a strong probability of generating significantly more cash flow at the time of your retirement so that they will be better positioned to pay you the dividends that you will hopefully be living off of.
This guiding principle can seem somewhat vague and open to interpretation. Because of this, I have outlined some principles for you to follow in choosing quality retirement stocks and eliminating risky ones from consideration. While these can by no means guarantee success, they will put the odds in your favor.
1. Consider demographics
American investors have a bias toward American stocks and American companies. These are companies that we often come into contact with on a regular basis, and we feel like we understand them. Unfortunately, America has lousy demographics from an investment standpoint. Americans are aging, and the American population is growing at a relatively slow pace. The former observation means that more Americans are reaching a point in their lives when they produce less and spend less money, and the latter fact means that in the future there will be a small increase in the number of producers and consumers in the United States.
With these points in mind, you need to look several years/decades out into the future. Which countries are going to have far more productive populations based on the fact that they have a low average age and based on the fact that they are growing their populations more rapidly? The answer is a handful of emerging market countries, but not all of them.