There is a wide diversity among the best stock market investments for children, retirement savings, dividends, and a conservative investing approach; Here are the options.

Many people try to predict the length and direction of the market’s rising and falling phases to make the best stock market investments. No one succeeds at it for long. In fact, most of these predictions turn out wrong.

The fact is that over a period of decades, the market goes through a series of irregular and largely unpredictable rising and falling phases. The falling periods may last six months, a year, even two years or more. When these falling periods end, the market turns upward again. Within a year or two or longer, the market generally hits a new high. Rising phases tend to last longer than falling phases.

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Due to this reality, we focus our attention on the best stock market investments to make for a variety of risk levels.

The best stock market investments for children: In-trust accounts and exchange traded funds

If you want to build up an investment portfolio for a child, then an informal in-trust account is a low-cost and flexible option.

An informal in-trust account has a donor (or “settlor”) who contributes funds to the trust. The trustee is the person in charge of the account, and is responsible for managing the funds for the child (the “beneficiary”). The settlor should not act as the trustee. The settlor’s spouse can be a trustee, however.

The money belongs to the child, but only the trustee can make withdrawals if the child is under the age of 18. Once the child reaches 18, the money is theirs to do with as they wish.

Exchange-traded funds are some of the best investments to choose as a starting point when building an in-trust account. If you start out with exchange-traded funds, we recommend putting, roughly half of your contributions into a Canadian exchange-traded fund and the remaining half into an exchange-traded fund holding U.S. stocks. ETFs, with their relatively low management fees (MERs), have in large part eclipsed interest in mutual funds.

The best stock market investments for retirement include RRSPs and RRIFs

If you want to pay less tax on dividends, interest and capital gains while you’re still working, investing in an RRSP is the way to go.

RRSPs (Registered Retirement Savings Plans) are a great way for investors to cut their tax bills and make more money from their retirement investing. RRSPs are a form of tax-deferred savings plans. RRSP contributions are tax deductible, and the investments grow tax-free.

Converting your RRSP to a RRIF (Registered Retirement Income Fund) is clearly one of the best of three alternatives at age 71. That’s because RRIFs offer more flexibility and tax savings than annuities or a lump-sum withdrawal (which in most cases is a poor retirement investing option, since you’ll be taxed on the entire amount in that year as ordinary income).

Like an RRSP, a RRIF can hold a range of investments. You don’t need to sell your RRSP holdings when you convert—you just transfer them to your RRIF.

The best stock market investments for conservative investors

Conservative investing is an investment strategy that involves a focus on lower-risk, predictable and stable businesses. This strategy typically involves the purchase of blue-chip stocks and other low-risk investments. A conservative investing approach also means building a well-balanced portfolio gradually, over time. The number of stocks in your portfolio will depend on where you are in your investing career.

Low risk investments equate to safer investments. For conservative investing, focus on investing in high-quality stocks that offer hidden value.

In our view, your goal as an investor, particularly if you follow a conservative investing strategy like the one we recommend, is to make an attractive return on your investments over a period of years or decades. Failure means making bad investments that leave you with meagre profits or losses.

The best stock market investments for dividends and safety

When it comes to investment safety, a long history of steady dividends is more important than a current high dividend yield.

Good dividend stocks are a valuable component of any sound investment portfolio.

As an income investor, you may wish to place more emphasis on Utilities and Canadian banks. That’s because these firms generally pay high, secure dividends, and have long histories of raising their payments, even during downturns. However, you’ll still want to make sure your portfolio is well-diversified across most if not all of the sectors.

By diversifying across most if not all of the five sectors, you avoid overloading yourself with stocks that are about to slump simply because of industry conditions or investor fashion.

You also increase your chances of stumbling upon a market superstar—a stock that does two to three or more times better than the market average.

We recommend against falling for high dividend yields because they may be a sign of problems to come. What leads you to question high dividend yields?

What do you think are some of the best stock market investments right now?