Saving vs Investing: Pathways to Happy Retirement
While we enjoy, we should also keep in mind that there will be times when there might not be as much enjoyment as you currently have. This moment you see and enjoy now is given to you to create and to prepare for the coming seasons of life. Make good use of the present, by investing in tomorrow. If you have worked tirelessly for years, you might want to be expectant of getting a quiet and blissful retirement, but the question now is: “how do you enjoy a happy retirement life”? Retirees who served the government always depend on pensions and retirement benefits to sustain themselves, but most times, this so-called pension and benefit don’t get to them early enough for their good, or does not even get to them at all – in some cases. Many times, those who are fortunate to get their pension eventually always ended up settling bills with the money.
Before you retire, you should always think of what your retirement life would be like, think of how you can survive without depending on retirements benefits which is why you should have a percentage of your current income saved up or invested before retiring.
The pathway to a happy retirement is either by saving or investing, depending on your preference, although both of them have their pros and cons.
Saving and investing are sometimes used interchangeably, but they mean different things in actual sense and it might be necessary to engage in either of the two or both in order to secure the future you desire after retirement. Savings and investment play big roles in our lives and it does not matter whether you are a government worker or a private worker, whether you are a student or an entrepreneur. The time to start saving and investing is now and not later, even if it means cutting down on some of your expenses. You will realize that all the sacrifices you make now are really worth it when the time comes. Include saving and investment into your plans for the future, whatever you do.
Keep in mind that savings can be short term or long term, and the same is true for investment. However, if your purpose in saving and investment is for retirement, they ought to be long term. What makes Savings and investment different however is the risk factor and we will be diving more into that shortly.
Saving: One thing you’ll need to understand about savings is that, savings is available whenever you need it and you can always make use of it. The money we save has low risk of being lost, but it also has a low tendency of increasing value. If you are yet to retire, it might be essential you dedicate a particular percentage to be saved. This will help you prepare well for retirement. However, due to the nature of savings, it might not be easy for you to keep saving alone for the whole period you spent in service (say you worked 35 years), because things will definitely come up within those 35 years that will warrant you spending out of your savings, no matter how determined you are. So, it is a good idea to not do savings alone as you plan for a better future for yourself. This takes us to the subject of investing or investment.
Investing: investing can be a whole lot of fun, but you have to be wise about it. Invest wisely. Investing involves high risk and also high profits, and for the most part, once the investment has been done, you will not have access to your money until the maturity period for the investment, whatever it is. To achieve a better return, it might be advisable you start investing early and aim for the long term. How early you invest will determine how well you get returns. Understanding different channels of investment and how to approach each one is imperative to being successful.
It is imperative to also consider carefully your chosen programme or platform for investment. Nowadays, there are digital investment platform which has simplified investment compared to the old, conventional investment channels. Carefully research and source for investment platforms or channels where you can invest and earn good ROI on your investments. It doesn’t matter how small your contribution is, it will pay off in the long run. Dedicate a particular amount of your salary to your chosen investments and when eventually the time comes for you to reap from your investment, you might be shocked, especially if you start on time and you’re patient to go the long term.
Investment time varies however. There are short and long term investments. Short term investments can mature between one to seven years, while long term investments can mature within from seven years and above. If you are so close to retirement, you might want to consider the short-term investments and if you are still fresh in service or still way far from retiring, you could give long term investments a good shot. It will pay off in the long run.
One clear difference between investment and savings is the risk factor. Another important factor is the accessibility of your funds with both savings and investment. When you save, you are usually able to pull that money out whenever you need it, however, the case is different with investment. When you invest, you get better and long-term gains or rewards referred to as ROI and investments, most of the times, are fixed and not withdrawable until it reaches its maturity. It is important to review your goals to figure out which option is best for you, saving or investing, although a mix of both is advised.
Either way, what is important is to keep your focus and understand the importance of personally planning for your retirement and not leave that sensitive period of your life to chance, or be fooled into thinking that the government will provide for you and take care of your needs when that time comes. If you depend on the government or the pension they promise, you might want to ask from a few people who have done that in the past, see how miserable some of them became because they had no back-up plan, and be properly guided as you approach your retirement.
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