For those of us out there who are investors, the world has felt uncertain lately. From the financial scare that was COVID-19 to all of the political policies being put in place, one might start to worry about the future. It is easy to panic, considering everything that is going on.
That said, it is not all doom and gloom. There are plenty of good things happening in the realm of finance and economics too – we just have to know where to look. Any of us who are planning on retirement sometime soon have a lot to consider, given everything that is going on.
Wondering what you should be focusing on if this is the boat that you are in? Today, we are here to answer that question, along with doing a general deep dive into preparing for retirement. Since there are so many possibilities out there, it can almost feel overwhelming to try to tackle them.
The Basics: Why Should We Invest in Our Retirement?
When we start to consider this topic, one of the first things that comes to mind is this: why is it so important to invest in our retirement? Why does everyone tell us to start saving for our golden years as soon as possible? Sites like this one: https://www.caab.org/en/the-importance-of-saving-for-retirement, can offer some insights.
The main idea here, though, is that we need to start as soon as possible because retirement is expensive. Realistically, “expensive” is putting it very lightly. Some estimations put the price of retirement at millions of dollars, so starting to save ASAP is tantamount to success. At least, it is if you are not looking to be working well past sixty-five.
Now, some people enjoy keeping themselves busy well into their seventies and eighties. However, if we are talking about needing to do so, it gets a lot less appealing. Most of us would probably like to maintain a certain standard of living, right? So, it makes sense to start to prepare for that as soon as possible.
How Does Saving for Retirement Work?
Once you do decide to save for retirement, the process might seem rather ambiguous. After all, there are so many different types of investments out there, narrowing it down to just one is a challenge. What are our options, and are there any that are clearly superior?
Traditional Investments
The first type of investment that you are probably already familiar with are the traditional ones. It is the stuff like stocks, bonds, and commodities. We will go into each of them in some depth but feel. e to skip ahead or pick and choose the seconds to read!
Stocks
When you think about investing, this is probably the first thing that comes to mind. Stocks are something that we can purchase, and they serve as a small percentage of business ownership. They are not necessarily the best option specifically for retirement, but we would be remiss not to include them.
Bonds
Another staple of investing, bonds are essentially a way that consumers like us lend money to the federal government. They are a bit better suited to retirement than stocks because like any other type of loan, they generate interest. This means that the longer you wait to cash out on a bond, the more money you will earn from one.
Commodities
Comparatively, these are a bit of an odd category. From gold investment to investing in agriculture like crops or even animal husbandry, there are a ton of possibilities. The types that each person opts for will depend on their comfort levels and knowledge in each respective field and market.
Precious Metals: What is the Big Deal?
We mentioned them in the prior section, but precious metals deserve their own highlight. They have been a mainstay of investing for centuries, even if it was not always viewed specifically as an investment. We have always considered them to be a type of asset.
There are four main types of precious metals: silver, gold, palladium, and platinum. The most popular for our purposes is definitely gold, although it is possible to utilize the rest of it as assets as well. When we want to get bullion (bars) of metal, the obvious choice is gold.
Now, if you aren’t sure why that is, resources like this one can help give you an idea. What is most important to remember is that gold is the most accessible in terms of bullion because it is often smelted into those bars. There are a ton of vendors that sell it as well, making it easier to obtain than something like platinum or palladium in particular.
The question remaining is this: why should we invest in gold? The answer is complicated because there are several potential reasons that an investor might point to. For one thing, it is important to diversify our portfolios. Adding in a commodity like gold, silver, or palladium can do wonders for that goal.
Beyond that, there is the fact that gold is a well-proven asset. Throughout history, humans have placed high value on it. Even as far back as Ancient Rome and Ancient Egypt, we have found artifacts made out of this precious metal. Today, it remains valuable and sought after all across the world.
The ultimate point in its favor that we will discuss for now is the fact that it can help protect us against inflation. It’s hardly a secret that a lot of people are worried about inflation rates and how much they’ve been rising, right? Gold serves as a hedge against it because it is not impacted by those rates as much as paper currency is.
How Do We Start Saving for Retirement?
Thus far, we have covered several different potential options for retirement funds. It can be hard to choose between them, so do not forget that you can opt for a few different ones. Really, the amount of money that you are comfortable setting aside for this purpose will probably determine your strategies there.
How do we actually get started, then? You have probably heard of them at least once, but the main way that people save for their retirements here in the United States is by utilizing IRAs, otherwise known as individual retirement arrangements. Similar options exist in other countries as well.
IRAs can hold all sorts of different investments, and the specifics will largely depend on the type that you opt for. An example of this is gold. Self-directed IRAs are where we deposit our precious metal holdings, at least if this is the route we want to take.
Getting started is pretty simple. You can approach pretty much any bank or financial institution and ask if they offer IRA accounts. Ask about the varieties they have and see what would suit your lifestyle and current financial situation best. Financial advisors can be helpful in situations like this as well.
Now, IRAs are not the only method of saving for retirement, but many people prefer them because of the tax benefits included. In most cases, contributions into individual retirement arrangements are tax deductible, so you can subtract the amount from your annual taxable wages. The other benefits will again depend on the type of IRA you go for.
Another potential option is a 401(k) plan, but these are opened in conjunction with an employer. They can be moved from one employer to another, but the specifics of contributions will vary from one employer to another. If you are not certain if you have one with your current employer, just ask about it or check your initial contract again.
No matter how you decide to start investing, just do it as soon as possible. The longer we leave our money in these types of savings accounts, the more interest or value they will generate while we wait for our golden years. Do not accept anything less than a great life for yourself once you retire.