Whether you’re on the brink of retirement, already enjoying it or looking forward many years, maintaining your standard of living while also being able to enjoy many new experiences is an important consideration. You’re going to need to have money to cover your day to day living costs, and you’ve not got a paycheck to fall back on. It means you need to have a smart investment plan that meets the following goals:
- Delivers adequate growth so your long-terms costs are covered, and it’s able to fight inflation
- Allows you to have a disposable income
- Is able to weather the ups and downs of the market
How to Meet These Investment Goals
There are going to be bills you need to pay on a regular basis so having an available amount of cash in your bank account is essential. As well as monthly bills, there are likely to be emergency costs you’ll need to be able to cover. How much of your investment portfolio you keep in cash is a matter of personal preference. A good rule of thumb, however, is to stick with an amount that covers a couple of months living expenses together with three to six months to cover emergencies.
Apart from a ready supply of cash, your retirement financial planning strategy could include one or more of the following:
- Total Return Portfolio
This is an investment strategy that uses a diversified and balanced combination of bond index and stock funds. These provide a retirement income by way of interest, dividends, and capital gains. The amount of income you receive varies from year to year and can be a little unpredictable, although the average rate of return is around 6-7%.
- Annuities
Annuities are popular for people who have already retired because they provide a guaranteed income immediately. However, they don’t suit everyone due to the number of assets that are tied up right away. They’re not the best option either if you struggle keeping within your budget, can’t stick with an investment plan, or social security payments are your only other income.
- Bonds
Bonds are a popular option because they are low-risk. However, that tends to mean the returns are much lower. They are useful as part of an investment portfolio because they produce regular interest income and their face value is returned when they mature.
- Cryptocurrencies
Cryptocurrencies have become a very popular form of investment, and there are people who have made sizeable profits from playing the markets. Next to Bitcoin, Ethereum mining is one of the fastest cryptocurrencies and one of the latest to take the world by storm.
- Real Estate
This kind of investment is not something you can sit back and wait for it to provide an income. A certain amount of hands-on work is required. It’s also an investment that requires a certain amount of research as there are many factors that need to be taken into consideration. These include expenses such as maintenance, rental damage, or natural disasters. What happens when the property is vacant also needs to be taken into account.
Whatever you decide to do for your retirement plan, make sure you do your research and seek the help of a professional financial adviser if necessary.
