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Investment Plan for Your Retirement

Retirement Investment

There are so many investment plans out there. The following points will help you choose the most appropriate one for you with the fewest risks and commitments to manage. The points are based on the fact that, after a while, they are going to be appreciating business ventures for your retirement.

1. Real Estate

Real estate is a retirement investment plan you should never overlook. Landon said ‘look for what’s going to give you the most bang for your back’. Real estate as a front is a very lucrative opening. However, one must research the market and know the current and emerging trends in the sector. The location of the real estate matters a lot and should be well selected. Some of the major locations can be near universities, developing towns or big company sites.

In any investment, capital becomes the main instrument to jump-start the investment. Research different financial organizations and try to compare their payment and funding terms. You can still opt to become a real estate trader. A real estate trader is one who buys property with the intention of holding it for a short period and selling it to make a profit.

2. Buy Bonds

When you buy a bond, you loan your money to either the government, a corporation or a municipality. The borrower agrees to pay you interest for a set amount of time and when the bond matures your principal is returned to you. The interest income, or yield, you receive from a bond (or from a bond fund) can be a steady source of retirement income.

Bonds have quality ratings to give you an idea of the financial strength of the issuer of the bond. There are short-term, mid-term, and long-term bonds. There are also bonds with adjustable interest rates, called floating rate bonds, as well as high-yield bonds, which pay higher coupon rates but have a lower quality rating. Bonds can be purchased as a package in the form of a bond mutual fund or bond exchange-traded fund, or you can buy individual bonds.

In retirement, individual bonds can be used to form a bond ladder with maturity dates set to match your future cash flow needs. This investment structure is often referred to as asset-liability matching or time-segmentation.

The principal value of bonds will fluctuate as interest rates change. In a rising interest rate environment, you can expect existing bond values to go down. If you plan on holding the bond to maturity, principal fluctuations won’t matter. If you own a bond mutual fund and need to sell it to use the funds for living expenses, principal fluctuations will matter.

Buy bonds for the income they produce and/or for the guaranteed principal you will receive when they mature—don’t buy them expecting high returns, or expecting to make a gain on capital appreciation. 

3. Stocks

In Nigeria, the main stock market is the Nigeria Stock Exchange (NSE). A stock market is a place where public limited companies and other financial institutions come to buy and sell bonds and other derivatives. NSE acts as a third-party broker and allows investors to buy and sell shares independently through share dealing platforms. You can directly and indirectly invest in stocks. Direct investment means that you buy shares from a company and become a shareholder, while indirect investment means you invest in more than one company, therefore spreading the risk. Indirect investment is done through an open-ended fund, and the money is secured so that even if the company defaults, the money is still safe.

Retirement Investment

4. Keep Some Safe Investments

You always want to keep a portion of your retirement investments in safe alternatives. The primary goal of any safe investment is to protect what you have rather than generate a high level of current income.

I recommend all retirees have some money in a reserve account (an emergency fund). This account should not be included as an asset available to produce retirement income. It is there as a safety net—something to turn to for unforeseen expenses that may come up in retirement.

Also, if you are not sure what to do with your money, park it in a safe investment while you take the time to make an educated decision. Too many people rush to put their money into an investment because they feel like it should not be sitting in the bank for too long. They end up making a rushed decision, which is never a good idea.

Making thoughtful, well-informed investment decisions takes time. While you are educating yourself or interviewing advisors it is perfectly okay to park your money somewhere safe. No reputable professional is going to pressure you into making a quick investment decision. If you’re feeling pressured you may not be dealing with someone who has your best interests in mind.

5. Mutual Funds

Mutual funds are some of the most overlooked yet probably the easiest way to invest much more than both stocks and bonds. A mutual fund is a pool of money, often from similar minded investors. You can sell your shares when and if you want. All shareholders of the fund benefit from the fund and share in any losses. There are five categories of mutual funds where you can choose the one which best suits you.

6. Pension Plan

A pension plan is a retirement plan that requires an employer to make contributions into a pool of funds set aside for a worker’s future benefit. The pool of funds is invested on the employee’s behalf, and the earnings on the investment are given to the worker upon retirement. In Nigeria, even self-employed workers can still contribute to the social security fund to help them when the time comes.

Retirement is a process where every living worker must come to terms to. Retirement is just like any other investment but a more crucial one since when you retire you productivity goes low due to health and age. You can start now and by the time you retire have significant benefits that can help you live a befitting like after retirement. Take a step today and plan to invest for your retirement now and be a happy retired worker living a good life and building the economy even at old age.

Are you Still thinking on which of the 6 options to pick? If yes why not contact us to assist you in making that wise decision Now.

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