Take Charge Of Your Personal Finances With Retirement As Your Focus
Most adults are aware of the essential nature of saving for their golden years, but with the overwhelming number of choices out there, sifting through them can be really intimidating. Having said that, at some point you have to sit down and decide what your retirement is going to look like. After you go through the ideas in this article, you are going to have a better comprehension of the retirement decisions that you face.
You first must decide what your retirement is going to look like. You can not just set your savings rate at work to match the employer contributions and assume you are set. What exact age do you want to retire? Where will you live-a dream home you build from scratch or an apartment to save money? What level of income are you going to want in your golden years and how many of those years do you plan on? What will your medical expenses look like and how much money can you expect from pensions or the government? Answer all these questions, and the reality of your retirement will readily present itself.
You need to have some idea what level of risk you are willing to take. Are you a conservative soul who wants to play it safe with bonds and dividend stocks? Or are you willing to give your money a chance to grow big through growth and value stocks? How much time you have is a big factor in making this call.
Consider professional assistance. A money manager costs money but can also probably make more money for you than you could on your own. They will handle things unemotionally, objectively and honestly.
Make sure that your savings are protected from inflation. If inflation is two percent annually, but your savings account only has one percentage point of interest, your money is shrinking. Money markets typically keep up pace of purchase power while leaving your funds with liquidity. Bonds and certificates of deposit beat inflation with some yield past that for minimal growth, at the downside of locking your money up.
Be realistic in what kinds of return rates you can expect. With savings accounts, certificates of deposit, money markets and even many bonds, this is easy to figure out. Stock markets are different stories. You might know that stock markets average around seven to ten percent annual growth, but that is average over many decades and only really true with index funds. Dividend and blue chip stocks may not hold that pace. Growth stocks can move far past it or also crash hard.
Market volatility can keep you up at night. The market swings are unavoidable, but the last thing you ever want to do is make a panic decision when investing long term. This is where a cool headed money manager can let you sleep at night.
Review your portfolio monthly, and rebalance so that your gains can be planted in growth areas yet to rebound and grow. Doing so monthly usually involves too many fees to be worthwhile, and doing so less frequently might miss quarterly cycles.
As mentioned earlier, a number of essential facets determine the reality of your retirement dreams. For instance, not all individuals share your level of risk tolerance within the markets, and yours might change as you age. Setting your golden year goals and keeping in mind the pointers of this article will help you start molding your retirement.
