Investing for retirement considers the several ways and strategies of generating and growing your income for retirement and old age. It highlights the different ways you can spend today to guarantee your tomorrow. The concept of early retirement is fast spreading across the world; people no longer want to work until they are too old to enjoy their past times, so there has been a corresponding pressure to amass as much wealth that will ensure that your retirement shall be full of fun and freedom from financial worries. This need not be a source of worry if properly guided and that is what this article is about.
WHAT INVESTMENT TO MAKE
There are many financial products being sold as a protection for retirement. The problem is that most people are afraid of them because they don’t understand how they work. We will list a few explaining basic things about each.
This represents a stake in a company. When you invest in stock you are a co owner of that company and are entitle to a share of it profits based on your number of shares.
HOW TO MAKE MONEY FROM SHARES
This is important if you have to raise enough money for retirement. Two ways are there to make money from stocks, the first is to invest and wait for the value of your stocks to appreciate in value and you can then sell the shares, the second is through dividends which a company gives after a profitable year.
The Government Issue bonds to raise money for specific purposes. A bond is a form of loan you give to this company or government that has to be repaid after a certain period of time. What you benefit is an interest and the amount loaned. It is an easy way to raise money in the long term especially attractive is its low risk value which is good for those keeping something for retirement.
- MUTUAL FUND
Most time average investors are limited from putting money into certain highly profitable ventures because of capital. Mutual fund solves this problem by pooling money from various small investors, thousand of them to raise a large amount which can be invested in profitable businesses. At the end, the total profit is shared and each investor gets a piece of the profit. Mutual funds are handled by professional fund managers or a team of them. The good thing about mutual fund when compared to most other investment is the diversification that is possible with mutual fund. This guarantees that no matter what, there is a profit to be made as the investment is not always all in one industry.
Exchange traded fund or ETF are a special form of mutual funds which are both as simple to operate as index mutual funds and as flexible as stocks. ETF can be traded on exchanges, so they can be bought and sold like stocks and the fees are very low.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.