Investing your retirement savingsby Admin | August 3, 2021
How to invest your retirement savings?
Discover how to invest your retirement savings and learn some of the best tips for doing so.
When you stop working, you will depend on your pension to maintain your lifestyle. However, to have a hassle-free retirement, the ideal is to save for retirement.
That is why many people organize their income according to the 50/30/20 rule to better control their resources. This method consists of allocating 50% of what you earn to the most necessary things such as mortgage or rent, utilities such as electricity, water, food, among others.
Then allocate 30% for expendable expenses, such as entertainment, and the remaining 20% of your income, allocate it to savings. Organizing yourself in this way during most of your working life can mean a very good amount of savings for retirement.
Although saving is essential for when you stop working, if you only save, you are not earning. It's very simple, as a result of macroeconomic changes that occur every year, prices go up. This phenomenon is called inflation.
To counteract inflation, you should be able to make your savings exceed the inflation threshold, year after year. The best way to achieve this is with investments.
How to invest your savings?
You can't just jump into the adventure of investing without knowing about it, there are many things you should know before you do it. For example, the more profits the investment offers you, the more risks associated with it. There are also investments that require a small amount of money and others that need more to get started.
There are investments that you can withdraw from at any time and others that require your money after a certain minimum time. There may also be investments that have more emotional components, such as the business of a family member or friend.
Tips you should take into account before investing savings
First set a goal. It is not about saying: "I am going to invest savings until I have enough to retire", it is about having a fixed amount. Calculate how much you need and that will be your goal. This way it will be easy for you to know where, how much, how long and what to invest in.
Identify your investor profile. Once you know how much you want to raise, but before looking for what to invest in, you should define whether you are a conservative, moderate or aggressive investor. To know what your profile is, analyze how you feel about risk. If you are very comfortable, you are risky, if you tolerate it, you are moderate, but if it makes you nervous, you are conservative.
Diversify your investments. One of the most widespread pieces of advice is not to put all your money in a single investment, the ideal is to diversify. If you can invest in risky operations, seek to mitigate in others with little risk.
Read and research everything you can about investments. It is very important to be well informed about the world of investments and not get carried away only by success stories. If you research well, you will formulate your own opinion and you will be able to find the instruments you are most comfortable investing with.
How to invest your savings safely?
All risks when investing savings can be mitigated, especially if you diversify your investments, know your objective and identify your investor profile. Take into account the following recommendations for your investments.
Fear of risk. If you are looking to invest your savings and you are conservative, look for certainty in government debt instruments such as 401k for most of your savings and place the smaller part in mutual funds. Both are very safe, although 401k have low yields.
Bear the risk. If you have a moderate profile, you can look for investments that combine fixed income with variable income. This way you can always get additional income in case of variations that favor you.
Master the risk. If you are an aggressive investor, you will look for maximum returns in any term. You will also have to be more attentive to the markets. Stocks and bonds will be your daily trading. In addition, you will always be open to new opportunities to learn how to invest your savings.