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.
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.
Guest post written by Molly Biggs from pay day loans. She has been working as a finance blogger and helps people get rid of all their financial dificulties through her website.