Invest today for a better tomorrow, as nobody ever said- “I saved a lot for my retirement”
Saving for retirement is undoubtedly one of the priorities of many people. Although we don’t always do it, we know that we should set aside a portion of every pay check to achieve our future goals. And these days, if you work from home, you might even find yourself with a little more money to put away each month.
However, when trying to determine the best way to save and invest for retirement, many questions can arise. Here is a short guide that will help you achieve your financial goals.
Old money rules need an update
First of all, if you don’t know where to start, you’re not alone. Indeed, many current investors have learned notions of money that are now outdated.
For example, our grandparents and parents gave more importance to buying a house than to making investments in other forms. Many of them thought that when reaching the age of 50, their children will be there to take care of their expenses after retirement.
Today’s reality is quite different, especially for young investors. People are spending more on post-secondary education. Homeownership isn’t as easy as it once was, especially in major cities, and some people still have mortgages to pay in retirement.
In addition, many people do not have access to a traditional pension, offered by the employer, which automatically puts money aside to provide them with a regular income when the time comes to retire.
Another reason why saving for the future is not like it was in the past is that interest rates are very low today. In the past, people could save for longer-term goals, however, with current interest rates at their lowest levels, investments in fixed deposits may not offer the growth that people are looking for in order to achieve their financial goals.
Investors today should ideally look for returns above inflation in order to get closer to their goals, such as saving for retirement. All of these changes mean that what once worked might not work today.
However, there is good news: despite the discouraging appearances, today you have more savings options. Read on to learn about new financial tools that can help you succeed financially.
Tip: A smart approach to investing
When you’re ready to get started, there is a multitude of options available when it comes to financial products. But before deciding which is best for you, dig deeper to fully understand the different available investment products.
Retirement investment plans– Potentially reduce taxes payable when you contribute; however, the tax must be paid when you withdraw money from it.
Bonds– Usually represent a lower level of risk than stocks, but low-interest rates also mean low growth, making it a little difficult to meet your long-term financial goals but offer capital protection.
Stocks– Involve unmanaged investments in the shares of different companies, requiring your time and attention.
Best Mutual Funds India– Managed by professionals, with many possible choices. Provide access to potential market growth by bundling stocks of different companies, as well as bonds, liquid funds, short-term funds, etc., into a single product. Investments involve the risk of loss, so investors are advised to read the prospectus before investing.
Start investing in SIP today and keep investing on regular basis to have good returns in long run.
SIP works on the POWER OF COMPOUNDING. When you consistently invest for a long period of time, the interest earned is reinvested and you earn returns on the collective amount. This is known as Compounding Effect.
Exchange-Traded Funds (ETFs) – A cheaper way to access long-term market performance, including many different company stocks, in various indices. For example, some are general stock markets, some are sector-specific.