There are so many out there offering advice on how to invest money, each with their own theory and investment model which is “guaranteed” to give you a return of X% but when it comes to your retirement you don’t want some fancy scheme that may offer you a return higher than the markets are returning or a return that is so high your common sense goes out the window and you risk it all on a wing and a prayer.
There are simple rules on how to invest for retirement and if you stick to the rules, you will be able to live out your retirement in relative comfort, do what you had planned to do and have a little left over to leave to the kids when you die. This sounds ideal to most but how to invest your money for retirement becomes more and more complex with the more money you have or the greater your expectations during retirement or the time you have given yourself to save for your retirement.
We are going to assume that you are just starting out in the working world, are about 25 years old, have studied for a degree and are thinking of starting a family. If this is not you or you did not start out as early as 25 keep reading, the principles still apply.
Knowing where to Invest money for retirement is dependent on your age and circumstances and the type of return you need to live the Retirement dream you have planned for yourself and your family. Most retirement planning is geared towards creating an income for yourself and increasing the value of your assets during your working life to cater for all of your needs during retirement and should start as early as possible, in other words from your first salary cheque.
How to invest for retirement to achieve the results you require is through a diverse portfolio of appreciating assets and income producing investments.
Property: Early on in life a large portion of your income will be spent on property, for some as much as 30% of their income. The secret with owning and profiting from property is to pay additional amounts into your bond to reduce the interest portion of your investment. You can play around with the mortgage calculator to see the massive difference a little extra every month does to your mortgage repayment.
Annuity Investments: There are various types of Annuities including the Living Annuity which offer guaranteed income. When you retire you are required to purchase Annuities with the proceeds of the Pensionnp lan you have been contributing to.
Stocks: Investing in stocks is the riskier portion of your retirement investment portfolio that should be in lower risk stocks or investment products that track an index like Gold ETF’s or SATRIX. ETF’s are particularly attractive due to their low cost structure.
Consult a financial planner to best ensure that your savings and risk profile will cater for your needs after retirement