Invest safely for the longer term

85. Look past your working years. Even if you hang up your hat within the decade, wealth building is a longer-term project. Yet only one in five pre-retirees uses a 20-plus-year time horizon when making big financial decisions, according to a Society of Actuaries survey. Bad idea.

Today's 65-year-olds have a 50% chance of living to their mid-eighties. With above-average health, your life expectancy is even longer. So stay committed to stocks. Vanguard and T. Rowe Price 2015 target retirement funds have 50% to 60% in stocks.

86. Invest for income safely ... Over the past 30 years, stocks that pay a dividend have returned five times as much as nonpayers. Focus on firms strong enough to keep up (and boost) payouts. Add a layer of defense by sticking with relatively cheap stocks, since dividend-payers are getting expensive.

Josh Peters, editor of Morningstar Dividend Investor, likes Chevron (CVX, Fortune 500) (3% current yield) and Philip Morris (PM, Fortune 500) (3.6%). Both trade at P/E ratios below their industry's norm and have boosted payouts by roughly 10% annually over the past three years.

Related: How much will you need for retirement?

87. ... Or take a flier. Investing in the 10 highest yielders in the Dow Jones industrial average -- the "Dogs of the Dow" strategy -- isn't for the faint of heart.

Some stocks are high yielders because they throw off so much cash (think AT&T (T, Fortune 500), others because their prices have sunk (take Hewlett-Packard (HPQ, Fortune 500)). This aggressive approach, which captures both kinds of high yielders, has nearly doubled the market's return since 2000. You can buy all 10 via the Elements Dogs of the Dow (DOD) exchange-traded note or Hennessy Total Return Fund (HDOGX).


  @Money - Last updated April 18 2013 04:35 PM ET
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