Friday, September 13, 2013

Early Investments Help You Financially after Retirements

In the past workers were enjoying the security of the pension plan, however today they are not that fortunate. These days it’s up to each and every worker to make preparations for their own retirement, meaning that they have to do some serious planning. Each one of us can enjoy a happy and a much financially secure retirement, however it is very essential to start preparing for it as early as possible.

Take Advantage of the Tax-Deferred Savings

“If you have an access to the 401k plan at your place of work, consider investing in it as much as you can really afford.

  • A 401k plan normally provides an opportune way of saving for your retirement and also reduces the current income taxes. 
  • That normally means that if you usually get refunds, investing in 401k boosts the size of that particular refund. 
  • If you owe money, the 401k reduces what you owe and to some extent tips the scales back to the refund.
  • In addition to the upfront tax savings, the cash that you invest in 401k accumulates on a tax deferred basis, denoting that the amounts are only taxed when you receive it once you retire.”

Ramp-up The Contributions

“If the 401k plan has an automatic escalation feature, make use of that benefit.

  • An automatic escalation feature normally increases the percentage of your contribution each year until the maximum that has been set by the plan. 
  • That makes investment for your retirement automatic and painless, eliminating the biggest impediment to investing in 401k plan in your firm. 
  • Avoid the inactivity when it comes to the 401k plans, signifying that you never adjust the contributions to account for the raises and a change in financial situation.
  • Placing your savings on an automatic escalation feature helps you to save more therefore accumulating a much larger retirement portfolio.”

Invest steadily

“Invest in dependable and steady stocks, and then leave your investments alone.

  • Some blue chip companies like AT&T or even Ford, had been in occupation for decades, and they have consistent and steady growth every financial year, making them a great opportunity for investing. 
  • Leaving your invested stocks alone ensures that you are giving them enough time that they require to perform to the fullest.”

Mutual Fund

“Make sure that you contribute more frequently or even annually to a mutual fund.

  • A mutual fund is one of the safest long term investment opportunities that you will ever have, with yields above 10% common.
  • In many cases, you can withdraw your mutual funds without penalty as well as contributing to it as often as you may like.”

Agency Bonds or Treasury bonds

“Buy either the U.S. Agency Bonds or Treasury bonds.

  • Treasury bonds are normally guaranteed, but with lower interest rates. 
  • Agency bonds issued by the government agency rather than the Treasury are never guaranteed, but have much higher interest rates.”

Set Up Goals

“Set up a step by step plan.

  • Financial experts recommend that you set up your goals based on where you actually want to be 9, 6 and 3 years before getting to the retirement age. 
  • This gives you enough time to plan as well as execute your ideas and would let you modify your plan if it becomes hard to meet these goals.
  • Step up the speed of your plans as you approach the retirement age. 
  • Increase the frequency and the amounts of your contributions, and keep investing in additional stocks.” 

Pay Off Your Debts

“Come up with a good plan of paying off all the debts that you owe long enough before you retire.

  • This should be your objective of going into retirement without outstanding credit card debt; however you should also finish paying for your mortgage prior to retirement.”

Decide how much wealth you require to live comfortably

“Think about your day to day expenses, but make sure that you add things that you will want to do in the future that you aren’t doing now, such as pursuing a hobby or even traveling.

  • Take into consideration the price changes and inflation, and do not forget to plan for the unforeseen circumstances.”

Opt For Financial Planner

“Consider looking for some help from a financial planner who will help you to set up a good savings plan and investment.

  • This is very significant if you have little or no knowledge about the finances or if you’re looking to invest in large capital quantities and need the assistance of a professional.”

Crunch The Numbers

“The Internet has very useful tools available that can help you to figure out exactly how much you should be saving.

  • These tools are very simple to use. You just input what you want to be saving every month, and they calculate the estimated worth.”

Level Of Risk

"Make sure that you know your actual level of risk.

  • If you are conservative with your money you will need to set up smaller goals. 
  • People who are willing to risk can make loftier goals however they need to be much aware of their chances. 
  • Knowing your exact comfort level is the key to determining the plans and goals that you have once you retire. 
  • Assess your financial situation and commitments that you currently have will help you to determine the amount of money you need to put towards your retirement.”

Avoid Market Timing

“Even major experts in this industry have some troubles calling bear and bull markets, so your chances of getting everything right every time is very small.

  • People who try to time the markets usually end up getting in and out of it at the wrong time, and that can eat their profits in a long term. 
  • It’s always good to use the dollar cost averaging approach meaning that you invest a similar amount of money every month, despite how the stock markets are doing. 
  • This will allow you to accrue more shares when the stock market is down and profit when it recovers.

See your accountant, financial planner or call axa insurance contact number for more objective opinions on how you can save your money for retirement. You may not see some areas of your normal budget to cut more retirement money; however these professionals will convince you otherwise and can give you a much clearer picture of all the options that you have.”

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