Retirement Edification

Retirement planning is summarized with the phrase, "Don't put all of you eggs in one basket." Many people rely on the company to save them. This plan has many flaws. The economy is shaky and the cost of living goes up not down. In addition to a pension or 401k, people need mutual funds, bonds and stocks. Keep track of investments while remembering it is a long term investment. See how much the fund makes over five to ten years since it fluctuates frequently. If the company is falters review options. A different mutual fund might be better. It could be time to rollover.

Develop a portfolio when investing directly in the stock market. This means investing in several different companies. My Financial Management Professor Dr. Larry Woodward recommends investing in at least thirty different companies. This is not realistic to most people. On-line stock trade makes buying and selling stocks affordable; however, if a person only has $500 of spendable income, invest in two companies to create a safe guard.

After gaining enough money through reinvesting dividends or day trade limit investing $2,000 to $5,000 in any one company. The stock market is sensitive. Buying and selling one hundred or two hundred shares will not collapse the market. Research the company and their balance sheets before buying long term shares. New companies have growth potential, yet they need to make a profit to stay in business. That is why people trust well known companies. People associate a good name with prosperity; however, the balance sheets reveal how the company is truly performing.

Investing overseas diversifies a portfolio. The ups and down of economy follows different patterns. A general rule of investing for retirement is to invest in risky stocks while younger to make a bigger profit. Invest in steady stocks when older. Bonds and utilities are conservative options. If United States Treasury Bonds lose value the country was taken over by a foreign power. Retirement isn't as important anymore.

Insurance companies try making money on affordable term life insurance; however, there is a good chance you are the one that lived. Wouldn't it be better to have ten thousand dollars in savings, to cover burial costs? Even if living over one hundred years, the money is yours. Since most people don't have ten thousand dollars while still having house and car payments a spouse may want term insurance. Lower payments allow them to save ten thousand dollars in the meantime.

Whole life insurance is like a savings that earns interest on monthly payments; however, in the event of death, it may only pay the amount paid to the account with interest. In the event of living it can be withdrawn in a lump sum to pay off other bills or transfer to an annuity.

It is possible to roll a trading account into a retirement fund. As a tax shelter the retiree withdrawals funds to create an annuity that pays a monthly check. The financial institute offering an annuity uses the money as investment capital and promises compound interest on the lump sum. This allows the money to remain current with increased costs of living. One type of annuity pays a larger monthly check and is not transferable to a beneficiary. The other type pays a lower monthly check and is transferable to benefactor. The whole thing will be paid, with interest, regardless of when the person died.

Buying rental property or a home is difficult. When a person owns their home they no longer have a monthly mortgage payment. They pay property tax and insurance. Fewer bills equal spendable income. Owning everything needed to survive is the retiree goal, even if it means cost controlled apartments. People have illnesses when they get old. They need pills, clothes, vacations and a life. Income becomes fixed. Taxes don't stop for six months to a year after a death. Diversify investments and pay off debts, so income is higher than expenses.

It is like an endless battle moving from earning paychecks to surviving without credit cards and insurance. Yet it is the best method to gain a fulfilling retirement. A planned retirement equals memorable moments and experiences while elderly.

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