If you want to know your investment portfolio percentage, there is a rule that you take 100 and subtract your present age from it. The difference is the percentage you are supposed to invest in stocks. For instance, if you are 35, your stocks portfolio should be at 65 percent. However, technology and advanced medical care has made it possible for an average American citizen to live longer than earlier anticipated. This has made financial planners go back to the drawing board again. All the same, this should serve as a wakeup call. It is high time you thought about investing as a way of accumulating funds for your sunset years.
Experts at investing recommend the following investments that go hand in hand with your age:
Stocks and bonds
When saving for retirement, you are looking at funds that you will not touch for several years. Stocks are the most ideal here. You should also put in a mix of bonds for equal measure. These will help counter the inflation effect that comes about when stock prices fluctuate. In order to arrive at the right mix, use the above mentioned rule of thumb i.e. 100 minus your present age. The resultant percentage should go to stocks. As for the balance, let that be represented by bonds.
Retirement Roth IRA
This guarantees you tax-free income when you retire. As a young person, you have the asset of time. If you begin saving for retirement early enough, you will have a lot of time ahead to accumulate these savings. On top of your employer-sponsored plan, get into an individual IRA plan. The beauty with plans sponsored by employers is that your employer matches your contributions with an equivalent amount. Ultimately, by combining these two, you will be able to cash in on tax benefits and superior returns. This will leave you with a good amount of cash once you retire.
Owning a home is such an ideal investment. If you can manage to start saving or take a mortgage, by the time you are hitting your fifties, you will have cleared the mortgage. This then ensures that you have a home to retire into. On the other hand, it will be fully paid up. By renting out your home and living on a cheaper rented apartment, it is possible to generate funds to pay your loan on a monthly basis. Another alternative is to live on one side of the house and rent out the other part.
If at all you have to accumulate funds to save for old age, it is high time you changed your lifestyle. You need to have self-discipline. Keep your expenses to a bare minimum. Do not spend money on something you have not budgeted for. Automate your savings such that the money you have purposed to keep aside is automatically deducted from your paycheck.