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Getting Retired Soon? Best Investment Options For You

Retired life is a period meant for life relaxation and quietness. It is a time when you want to live peacefully after a whole life of hard work. In such a period, it would be very depressing to not have a regular source of money. Financial planning done before and after retirement can easily help you solve all such problems. Here are some of the best investment options you can follow.

retirement money

Before retirement

There are various options that help you to secure your financial position after retirement. Some of them are EPF, VPF, and NPS. EPF stands for Employee Provident Fund. It is compulsory for all companies to have more than 20 employees.

Both the company and the employee pay fixed percentages of money which are used later for the pension scheme. You also get a fixed interest on this amount. Voluntary Provident Fund (VPF) allows you to increase your contribution to the EPF above the fixed sum that has to be paid.

This is very beneficial if it is practicable because it will help provide you with additional help during your post-pension days. There are various other pension and insurance schemes introduced by the government as well as by private companies.

You can also put your money into annuities and they will ensure that you get a fixed amount of money every month which would be almost like a salary after retirement.

It is important to study all these available options and choose the one that suits your financial conditions. The more you are able to save and invest, the safer and more secure your future and old age will be.

Equities and mutual funds

These are options for people who had started their retirement planning earlier and have spare cash available after retirement. Investing in equities needs to be planned and diversified.

Only then will it provide you with good capital gains in the long term. Investment in mutual funds needs to be calculated. There is the temptation of high profits but losses are equally probable in mutual funds.

One huge loss may be enough to jeopardize all your retirement planning. It is very important to consider the risk factor. It is advisable not to go for mutual fund investments unless you have some experience in the field.

Treasury bonds

These can prove to be very useful if you are looking for security in investment. They will not give you as many returns as successful stock market investments can.

But in your old age, when peace seems more important than a little extra money, it is better to play safe. So treasury bonds can be a good option because they will assure you of a fixed amount of return and will not require a lot of work.

Fixed deposits

You can go for fixed deposits if you are not willing to take any risk at all. Being a senior citizen, you will not only get a higher rate of interest but also other benefits when you invest in fixed deposits.

Binary options

If you choose the best binary options among the numerous available ones, it will be a very good investment. They will provide you with quick income and good returns. It is a short term investment which will also serve the purpose of keeping you a little busy during your retirement period.

How To Invest Your Retirement Money?

Investing one’s retirement money is as important as saving in the younger days of one’s life to be able to have decent money during the old age. With passing time, inflation only grows, and one’s increasing expenses too can come in quite suddenly and unexpectedly at times.

These may primarily consist of health expenditures, but very often also include higher education expenditures for children, expenditures on marriages for children, shifting to a new home with one’s spouse during old age, having that one last foreign long vacation in life, and much more. However, to make sure that all of this is possible, and happens smoothly without any kind of problems, it is important to take wise decisions in terms of investing one’s retirement money.

Fixed Deposits and Bonds

For a duration of 3-5 years, most banks offer quite lucrative rates for Fixed Deposits. These are ideally the best, especially for those who are not too fond of taking risks and do not wish to invest in avenues such as the stock market. The good thing about Fixed Deposits is that they can be renewed upon maturity, and in case of an urgent financial need, can be broken down at a reasonable penalty.

Bonds are also more or less a good option. Government issued tax-free bonds are best when they are at an interest rate of 8% or higher. Of course, the benefits totally differ from person to person; depending on what income tax bracket they happen to fall under, with all their retirement money.

Non-Governmental and Other Bonds, Deposits and Debentures

The market these days also has investment options of fixed deposits, bonds and debentures by many companies, and not just banks. Of course, the risk is higher in such cases, as one can never be too sure of the company. However, if it happens to be a reputed name, and has certain ratings, such as that of AA or AAA to prove their credibility, then the investments are totally worth making. One of the reasons why this option is good is because of an even higher rate of interest than what is offered by banks.

Ideally, one must not look at investing more than 10-15% of their income portfolio in this area, as bonds and debentures may still have a higher risk of redemption mid-tenure (unless one is aware of bond price movements), as compared to fixed deposits.

Building Assets

This is not recommended for all, especially for those whose income portfolio is quite low. As long as one is sure of the fact they have enough money to survive for the rest of their lives, with a slight buffer too, they can use their surplus income to invest in areas such as Real Estate.

These, of course, have more personal goals attached to them too, wherein people want to leave assets behind for their children. Apart from that, investments in Gold can also be looked at.

Overall, the idea is to create wealth and assets, which will either come in handy in times of need or will be left behind as useful back-ups for the younger family members.

5 Tips When It Comes To Retirement Planning

Retirement planning is one of the most critical tasks people have to do today. As the name may suggest, this is a task that will help you decide how you will live life once you are unable, or unwilling to continue working.

Retirement planning entails making considerations on several factors including the age at which you plan to retire, the amount of money you will need to cater to your living expenses, and the things that you will do the moment you will retire, and of course where your money will come from once you retire.

In simple terms, retirement planning is putting your finances in order for the future. The process of planning for your retirement is as simple as creating a retirement plan and sticking to it through depressions, markets ups and downs, recessions, and all else that may arise in an uncertain and unpredictable world. Here are some important tips to get you started.

It is already late to start planning for your retirement?

One of the most basic tips when it comes to retirement planning is to assume and believe that it is already late to start saving money for your sunset years. Rather than assuming there is still time to save, it is always advisable that you start planning as early as you possibly can.

You do not have to be profitable to start saving for your retirement; using your projected retirement age, you can be able to plan ahead accordingly.

Set your Budget

By the same token, you need to create an investment plan once you start earning. This you do by setting a budget of the minimum amount of money you can afford to channel towards your retirement kitty, and defining the frequency at which you should be doing it.

If you are employed in the mainstream industry, you can be doing it on a monthly basis out of your salary, or you can opt to do it on a quarterly or bi-annual basis if you are in business.

Diversify your investment portfolio

It goes without saying that retirement planning i.e. saving money for your sunset years is considered a form of investment. In order to plan for your retirement effectively, you will need to diversify your investments. You can consider investing in real estate, stocks, and bonds, private equity, commodities, etc.

Are you aware of taxes on your retirement planning kitty?

The other important tip to know about retirement planning is taxation. When you invest in a qualified retirement plan such as 401k or IRA, you can be guaranteed that they are tax-efficient ways of saving money for your sunset years.

Most of these plans allow one to make pre-tax contributions or tax-deductible contributions depending on the plan selected. The last thing you would want is to invest your all only to find a huge chunk deducted by the time you start to claim your retirement package.

Professional assistance

Looking for professional help when planning for retirement is a great tip that should never be overlooked! Working with a professional financial planner will help you put your finances in order so you can get the most returns that can be generated form your retirement investment kitty while structuring the withdrawals or payments in a way that gives enough financial support without affecting the retirement kitty.

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