Saturday, December 15, 2012

Guidelines In Investing Your Retirement Money

Retirement (Photo credit: Tax Credits)
Enjoyment in life does not have to end when one retires from his job and leaves work. In fact, it should be the time when one should sit back, relax, and reap or enjoy the fruits of his labor, so to speak.

But even during retirement, you should manage your finances and watch your expenses. Remember, you are no longer at work and you have no other means of earning an income. So unless you take care of your hard-earned retirement money, you may lose it through unnecessary spending and you may find yourself penniless one day.

When preparing for retirement, the first thing you should do is set aside money for your needs as well as for emergency purposes. Living expenses for food, clothing and shelter must not be disregarded. Similarly, an emergency fund that you can use in the event of illness, natural disaster and other unforeseen events must likewise be taken care of.

When all of these have been placed into your financial budget, it is time to explore your investment opportunities. As this is your retirement money, you need to be careful about the businesses that you want to put your money into. Many people have made the mistake of putting their retirement money into wrong investment ventures and end up losing much of their hard-earned money.

To avoid this, you need to avoid putting your money into high-risk investments to ensure that you have a secure financial base in the future and thus avoid bankruptcy. Although you may balance high-risk investment with low-risk financial opportunities, it is not a good decision to make.

Here are sound investments where you can invest your retirement money:

  • Treasury bonds – As many financial experts would say, treasury bonds are one of the safer options for investment. Unlike stocks, they have a fixed rate of interest, which means you know the constant growth rate of the bond.
  • Certificates of deposits – These are like money in time deposit term but in this type you will be penalized if you withdraw your money earlier as scheduled. However, if you have an individual retirement account (IRA), you can save and withdraw without penalty once you reach age 59.
  • Annuity – This is another option that financial advisors recommend. You can invest your money into an annuity where you can save or deposit money in a lump sum or in small amounts over time before you retire and receive back regular payments like a salary when you retire. You can choose from different kinds of annuities such as fixed annuities which has a set rate of interest, indexed annuities with a fluctuating interest based on a particular index, and variable annuities where you can choose how your money will be invested and whose rate of return will depend on the performance of your investments.
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