“Retirement is on your mind as soon as you start your first job. You want those moments of peace, travel, and focusing on your interests. You also want to be financially secure during this period so you can enjoy doing the things you have always wanted to do,” says noted Business Astrologer™ cum Astro Strategist™ Hirav Shah.
Hirav Shah says “Sadly, in the United States, the average amount saved for retirement is approximately $65,000, and in India, it amounts to around 25 Lakhs. This is far less than what’s required to live a comfortable life once you finish working. In the end, it must be supplemented with other forms of income. Many retired workers may have to take on a part-time job just to get by. Don’t let this be you. Start early and learn what you should invest in.”
According to Hirav Shah, here are five investments you should make for retirement.
The 401(k) has replaced the pension in many organizations. This is an advantage for you when it comes to retirement investments. Instead of staying with a company, the 401(k) is transferrable when you join another business. Furthermore, it has the potential to be rolled into a Roth IRA.
There are further plusses to this investment. First, you have the power to decide what funds it utilizes. Thus, safe investments are mixed with aggressive programs. Second, companies match your contributions to create an even larger fund.
Private Equity Investments
Private equity is a way to finance another company away from the public markets. In other words, the organization doesn’t offer public stocks. It relies on the investments of private individuals and organizations to help reach their goals.
This form of funding is done directly through the company or a private equity platform. Or you may have the option to make a single payment or divide it up. Additionally, when the company decides to release an initial public offering (IPO), you are given an early opportunity to invest.
There are different ways you receive a return on investment through a private equity company. Normally, you become a member of the board and receive a portion of the company’s profits. In another scenario, you get quarterly rewards. Sometimes, the percentage is greater than owning a public stock.
Traditional or Roth IRA
Investment in an individual retirement account (IRA) is possible whether or not you have a 401(k). It’s a good idea to simultaneously fund both options. Should you leave your job, you have the power to roll those retirement funds to the IRA.
The traditional Roth IRA allows you to invest pre-tax income into hundreds of different funds. These are interchangeable as you get older and want to increase the power your money has. On the downside, you end up paying taxes on the funds when you’re ready to remove them.
On the other hand, a Roth IRA contains after-tax investments that are deposited from a paycheck. Therefore, funds are withdrawn without any penalties as long as it’s done at the appropriate time.
It’s true that the value of traditional stocks constantly rises and falls over time. However, when you look at the overall history of these investments, they continually grow. Stocks are a long-term investment, to put it in another way.
The recommended way to utilize the stock market is to invest in a mix of single stocks and mutual funds. Of the two, the latter has shown great resilience during the market’s numerous down periods.
Company or Government Bonds
Bonds are forms of IOU to a government or corporation. You loan them money to fund a particular operation. In turn, you receive interest on the investment for the time the bond is in effect.
When that period ends, you get the money back along with interest. In the end, a bond is more secure than a public stock. You’re guaranteed full payment back on the former, whereas you could take a loss on the latter.
Hirav Shah says, “Needless to say, there are plenty of investments available to help fund your retirement. What you decide on depends on your income and age. If near retirement, then look at aggressive investments. Though they have a greater risk, the return potential is greater.”
Hirav Shah concludes the discussion by saying, “However, if you have time to invest, then fund a mix of stable and aggressive investments. Here, you have the option to adjust the funds to be more aggressive as you reach your retirement age. It is also recommended that you consider speaking with a financial advisor if you are unsure which types of 401k plans, stocks, and bonds to invest in.
In either case, don’t fret over the daily machinations of the market.
Have faith things will work out in the end.”