10 Jul 2019

Putting Your Money Where Your Mouth Is – Investing in Your Retirement the Right Way

Retirement is a reality that the majority of us will face at one point or another. Even though it may seem like a distant thing and doesn’t really affect you today, the truth is that it does affect you in shaping your future.

According to recent statistics released by the U.S. Department of Labor, individuals will need as much as 90 percent of their usable working income during a retirement period that can last an average of 20 years, yet sadly these statistics also demonstrate that 80 percent of current workers think they will not have enough money saved for their retirement. 

Many people live by the moto the earlier you start, the better off you will be, and this is very true. However, An important thing to remember is that investing is not the same thing as saving. There are similar factors involved in the sense of setting aside certain amounts, however in most cases simply saving will never be enough when compared against relative factors like salary increase rates vs. inflation rates and the common discipline it takes in not spending the money the next time a crisis arises. Another important difference is the benefits involved in compounding. 

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If one chooses to invest in their retirement instead of simply saving, they can find themselves benefiting in ways they may not have anticipated. In most cases a savings pocket will include a form of interest earned, and while it may seem sufficient at the time, in truth the best single interest rate one can receive is usually around 2% whereas most inflation can be as high as 3.88% actually putting you at a loss in the long run ; however by initiating compounding your interest earned can gain an even higher interest rate based on the interest percentages already in place; which can potentially double your growth rates, and  If you choose the smarter option and continuously reinvest the earnings you have, your return on investment will increase exponentially.

Getting Down to the Basics – Retirement Investment Considerations

How to build wealth
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Knowing where to start is the first step in achieving successful investing, and when it comes to handling these affairs yourself, there are certain questions that need to be answered to find the correct direction to move in. These points of interest include:

How Much Money One Needs to Invest Successfully

A common misconception is that to have a comfortable retirement; one needs to put away large amounts of money each year. If done right, it does not need to be that severe. A common guideline is that you should aim to replace 70% of your annual pre-retirement income, and you can replace it using a combination of savings, investments, Social Security and any other income sources which can work together to lower your average installment amounts.
For example if you were to invest $1000 per month with an interest rate of 3%  per annum your first year of investing will yield a profit of $360 that you did not have to take out of your own pocket, while the following year you will earn that same 3%  on $24 000 which will earn you an extra $720. It all comes down to which interest rate you can find. 

Which Forms of Investment Are Most Beneficial 

There are many forms of investment opportunities available to the public today, including Stock markets, investment bonds, and mutual funds. Each area will gain you a different return in different ways using different formulas, and at the end of the day, it all comes down to what you feel comfortable with.

Asset Allocation Changing According to Age

The rule of thumb when it comes to age-based asset allocation is that your exposure to most portfolio risk should reduce with age. This is a common factor usually does the time already spent investing, the more you invest, the more diversified your portfolio should become, so when you first started investing you concentrated on shares and then included bonds and savings. Having your eggs in different baskets should lower the most risks of loss.

Retiring Early 

Even though most individuals do not have open access to many forms of income, retiring early can still be a viable option for you. It is, however, extremely important to take the needed steps at an early stage if you want to make your early retirement goals a realistic future. Methods of achieving this include:  Saving Early and saving Often, eliminating your debts and increasing your income. Every dollar saved can go towards your investments, thereby decreasing the time estimate.

Investing early vs investing late
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Stocks, Bonds, and Mutual Funds

Because there are so many options available for investing purposes, it is always best to brush up on your understanding of what each one entails and how they work.

  • Perfect Your Purpose
    Tying down the actual reasons for the survey will always be the first step. Knowing what questions need to be answered will allow market intelligence survey consultants to accurately craft survey questions and layouts that are most likely to deliver the required information.
  • Bonds
    A bond can also be seen as a type of fixed-income security; it is an instrument created for the purpose of raising certain types of capital that can be used towards a plethora of costs. They are essentially loan agreements between the bond issuer and an investor, in which the bond issuer is obligated to pay a specified amount of money at specified future dates.
  • Mutual funds
    A mutual fund is used for the pooling of money collected from many investors to invest in securities such as stocks, bonds, money market instruments, and other assets. Mutual funds are operated and controlled by a trained professional in all matters involving money management and allocate the fund’s assets in an attempt to produce capital gains or income for the fund’s investors.

Making the Best Choice for Your Interests 

As in all things, there are pros and cons to each section. However, aptly named a mutual fund is usually found to be the most beneficial. Mutual funds represent another way to invest in stocks, bond, or cash alternatives. Essentially your money is collected and pooled, along with any additional monies of other investors, and then put into a specific fund, which then invests in certain securities according to a stated investment strategy.

Understanding stocks bonds and mutual funds
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Best Retirement Investments for Steady Incomes 

When done correctly investing would not only be a means of generating money to cover your retirement period, it could grow into something much larger and start generating an income of its own. There are numerous ways in which this can be achieved, which include:

Immediate Annuities

Immediate annuities can provide guaranteed income immediately and are a form of insurance rather than an investment. A ten-year term-certain annuity, for example, buys a stream of income for ten years. Because immediate annuities start paying out right away, they appeal to people already retired. However, They are not for everyone due to the fact that they can tie up assets.

Real Estate Investment Trusts 

This is a mutual fund that aggregates real estate holdings including apartment buildings, commercial structures, vacation properties, etc.; and For a fee, certain professionals can manage the properties, collect rent, and pay expenses, and you receive the remaining income each month.

Dividend Income Funds

A dividend is classed as an income fund which, like other funds, is a collection of stocks overseen by a fund manager. The dividends you receive come from the dividends paid out by the underlying stocks in the fund itself. Dividends can rise one year and fall the next. Some publicly-traded companies generate qualified dividends, which are taxed at a lower rate than other income.

Variable Annuity with a Lifetime Income Rider

In a variable annuity, your money goes into a portfolio of investments of your choosing. For a fee, you can add an optional benefit, called a rider. The rider ensures the amount of future income you can withdraw from your portfolio. 

Setting Up Your Future the Best Way Possible 

As in all things in life, proper planning and a beneficial direction choice can mean the difference between a difficult future and a successful life. At Research Optimus (ROP) this is something that we understand and calculate into every one of our services. With a vast team of skilled professionals and upgraded infrastructure, every project we start has an SLA with a 99.5% completion rate and strict TAT and Delivery guidelines. Our commitment to deadlines is a distinct characteristic that each of our clients is entitled to when they chose us. As a company always strive to provide personalized attention and customized research solutions to all clients.

So, if you find yourself in need of retirement investing assistance, do not hesitate to contact us.

– Research Optimus

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