Two Broad Steps On Investing For Retirement

There will come a time when we are old and our ability to work productively will be stunted. In those periods, the determinant of whether we would we be living off others or spending time having beautiful vacations is what we choose to do right now.

Time is a limited resource and one of the facts of life is that regardless of what we do, time will always catch up on us. In planning our finances, as such, it is important that we bear in mind the time factor.

There will come a time when we are old and our ability to work productively will be stunted. In those periods, the determinant of whether we would we be living off others or spending time having beautiful vacations is what we choose to do right now.

The two broad steps towards determining this include planning and building a diversified portfolio.

Planning

In order to properly invest for retirement, you need to plan. Without planning, it might be hard to set clear goals and you might not have the willpower to do all you need to do in terms of saving or investing.

Consider these questions when planning: At what age do you intend to retire? Where will you like to stay? What does your expected cost of living entail? Do you have travel plans?

If so, what will be the associated costs? What is your current net worth now and what does it need to be when you retire to ensure sustainable living? Knowing that your health will not be as good as it is now, how much money do you need to set aside for that? What kind of insurance will you need?

The planning process helps you highlight your key goals whether it is about living sustainably or touring the world when you are tired of working. It will give you a bird eye view of the amount of money you will need to make to attain your goals.

Having created a full picture of how you want to live in retirement, the next step is to outline the required resources. If you have listed out your goals correctly, you will realize that saving for retirement as opposed to investing for it, is a long and largely unproductive process.

How much money can you really save?

This is where investments come in. Investments have the ability to grow exponentially and if you invest correctly, your funds will not only work for you towards retirement, but they will also do so while in retirement.

Have a diversified portfolio

A good mix of growth stocks, mutual funds, real estate investments, and insurance/ emergency funds will give you a healthy balance. Growth stocks give your investments time to exponentially multiply especially when you re-invest your dividends.

Having insurance plans, emergency funds, and treasury investments will also provide a buffer for you in terms of risk management. On one hand, you will have a slow and steady growth in your income and on the other, you will mitigate some of the risks that could cause your investment efforts to be futile.

Retirement does not have to be a scary thought. Secure your future by investing for it today.

Written by Lawretta Egba