Investment plan for your retirement
There are so many investment plans available. The following points will guide you to choose the most suitable for you with less risks and commitments to manage. The points are based on the fact that, after a while, the business enterprises will appreciate for their retirement.
An annuity is a plan whereby an insurance company, in exchange for the purchase price, signs a contract to pay an agreed amount of money each year while the beneficiary is still alive.
Annuitant- is the person on whose life the contract depends.
Annuity: it is the amount of money that is paid to the beneficiary.
The benefits of an annuity, especially when used in connection with the retirement provision, is that it would ensure that the retiree has income for a convenient number of years. The best type of annuity is the deferred annuity because it gives you benefits for life.
A bond is a loan to a government or a corporation, whereby the borrower agrees to pay a fixed amount of interest, generally semi-annually, up to its total investment. Treasury bonds are safe medium and long-term investments that typically offer you an instant payment every six months during the maturity of the bond. Treasury bonds have a fixed rate, which means that the interest rate determined at auction is fixed for the life of the bond. This makes treasuries a long-term, predictable source of income.
3. Exchange-traded funds (ETFs)
An exchange-traded fund is an investment fund that is listed on stock exchanges just like stocks. An ETF holds assets such as stocks, oil futures, currencies, commodities or bonds and generally operates with an arbitrage mechanism to keep its trades close to its net asset value, although deviations may occasionally occur. These assets are divided into shares in which the shareholders do not own or have direct rights to investments in the fund.
ETF shareholders are entitled to a portion of the earnings, such as accrued interest or paid dividends.
In Kenya, the main stock market is the Nairobi Stock Exchange (NSE). A stock market is a place where corporations and other financial institutions come to buy and sell bonds and other derivatives. NSE acts as an external intermediary and allows investors to independently buy and sell shares through share trading platforms. You can invest directly and indirectly in stocks. Direct investment means that you buy shares in a company and become a shareholder, while indirect means that you invest in more than one company, therefore spreading the risk. Indirect investment is made through a variable capital fund and the money is safe, so that even the company defaults on the money.
5. Mutual funds
Mutual funds are some of the most overlooked, but probably the easiest way to invest much more than both stocks and bonds. A mutual fund is a pool of money, often of like-minded investors. You can sell your shares when and if you want. All shareholders of the fund benefit from the fund and share in the losses. There are five categories of mutual funds where you can choose the one that best suits your needs.
6. Real estate
Real estate is a retirement investment plan that you should never overlook. Landon said ‘look for what will get the most out of your back’. Real estate as a front is a very lucrative opening. However, you have to research the market and know the current and emerging trends in the sector. The location of the real estate is very important and must be well selected. Some of the prime locations may be near universities, developing cities, or large business sites. In any investment, the capital becomes the main organ to reactivate the investment. Research different financial organizations and try to compare their financing and payment terms. You can still choose to become a real estate trader. A real estate dealer is one who buys a property with the intention of keeping it for a short period and selling it for a profit.
7. Pension plan
The pension plan is a retirement plan that requires the employer to make contributions to a separate pool for the future benefit of the worker. The pool of funds is invested on the employee’s behalf and the investment proceeds are given to the worker upon retirement. In Kenya, even the self-employed can contribute to the social security fund to help them when the time comes.
Retirement is a process in which every living worker must come to an agreement. Retirement is like any other investment, but more crucial, since when you retire your productivity drops due to health and age. You can start now, and when you retire, you will have important benefits that can help you live a proper life after retirement. Take a step today and plan to invest for your retirement now and be a happy retired worker who lives a good life and builds the economy even in old age.