7 Ways on How to Invest For Your Retirement
There are so many investment plans available out there. The following points will guide you to choose the most appropriate one for you with lesser 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.
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Investment Plan for Your Retirement
An annuity is a plan whereby an insurance company in exchange for purchase price enters into a contract to pay an agreed amount of money every year while the annuitant is still alive.
Annuitant- is the person on whose life the contract depends.
Annuity- is the amount of money paid to the annuitant.
The benefit of an annuity especially when used in connection with retirement provision is that it would ensure that the retiree has an income for a convenient number of years. The best type of annuity is deferred annuity because it gives you lifetime benefits.
A bond is a loan to either a government or a corporation, whereby the borrower agrees to pay a fixed sum of interest usually semi-annually until your investment is in full.
Treasury bonds are secure, medium to long-term investments that typically offer you instant payment every six months throughout the bond maturity.
Treasury bonds have a fixed rate meaning that the interest rate determined at auction is locked in for the entire life of the bond. This makes treasury bonds a predictable, long-term source of income.
3. Exchange Traded Funds (ETFs)
An exchange-traded fund is an investment fund traded on stock exchanges just like stocks. An ETF holds assets such as stocks, oil futures, foreign currency, commodities, or bonds and generally operates with an arbitrage mechanism to keep its trading close to its net asset value, although deviations can occasionally occur.
These assets are divided into shares where shareholders do not directly own or have direct claim to the investments in the fund.
ETF shareholders are entitled to a proportion of the profits such as earned interest or dividends paid.
In Kenya, the main stock market is Nairobi 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 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 secure so that even the company defaults the money is still safe.
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. 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 organ 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 buys property intending to hold them for a short period and sell to make a profit.
7. Pension Plan
A pension plan is a retirement plan that requires an employer to make contributions into a pool of funds 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 Kenya, 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 with. Retirement is just like any other investment but a more crucial one since when you retire your 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 life 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.
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Article Source: https://EzineArticles.com/expert/Kivale_Joshua/2502529
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