Investment Information

Article Navigation

Click Here for more articles

Alternative Retirement Income Options in 2005

by: JT McNaught

A very wise and good friend of mine told me once: "One good investment is worth a 'lifetime' of labor." After reading this article, the wisdom behind this statement will be clear to you.

The big question we should all be asking ourselves is "how much do we need to save to be able to support ourselves?". We cant estimate that unless we first make some basic assumptions:

A zero-inflation is unrealistic. It's safe to assume however about 2% inflation. If it is higher than that, it is bad for the economy of the country., The Bank of Canada is is mandated to keep inflation under control, using interest rates. If the average rate of inflation for the next 50 years is 2%, then a dollar 50 years from now will be worth roughly (1 - 0.02)^50 = 36 cents. So if save one million dollars today, these retirement dollars will be worth about $360,000. That's still enough to give you an annual income of $36,000 -- well above the poverty level.

Compound interest is powerful magic. In 50 years, money doubles roughly 7 times, which means that a single $1000.00
investment will grow to roughly $128000.00. Other than the work you did in the first year to save the money, you haven't had to do anything for the next 50 years.

That's roughly one-tenth of the million dollars most people would like to have sqirreled away for retirement. If you also want to have a million dollars, you'll need to invest about ten times this amount: say, $1000 a year for the next 10 years. Or roughly save $100 a month. Not too difficult is it?

If you can save more, sooner and earn more longer; this is better. Hence the name of my website http://www.BetterRetirementSooner.com.

Lets not forget about the federal and state taxes we have to pay every year. We dont have many tax breaks anymore, but the RRSP / 401(k) is there for us to use. Your RRSP / 401(k) is your friend because the money that you put into an RRSP / 401(k) is not taxed until you draw from the plan.

If you can make a 10% return on your money inside your RRSP, you get to keep the entire 10% and the compounded untaxed growth dollars until you retire and start making withdrawals. If this same 10% was earned outside your RRSP/401(k), and your yearly marginal tax rate is roughly 45%, you only get to keep about 5.5 percent of that. So you can reinvest less,and therefore your money over the years will grows slower.

These days...How do you make a double-digit return on your money? GICs are a low risk investment. And respectively, GICS only pay upto 5%. At 5%, it will take 14 years for your money to double. A $10000.000 GIC will grow to about $115,000 over 50 years. If you managed to save $300 each month instead of $100, you could get up to $300,000 or $400,000, but you should also think about taking on a little more risk than just GICs. What do you do if you cant wait 50 years for your retirement nest-egg?

According to Statistics Canada the stock market has maintained an average return of 9% annually. If you're not a seasoned investor, you may not be comfortable with the idea of putting your money into the stock market. Trust me, if you do not know what you are doing, leave the stockmarket to the professionals because you can lose your shirt.

Don't try to time the markets yourself. There are to many variables and you don't have the information required fast enough to make the timely decisions necessary to be profitable. An inexperienced Day Trader will fsail as miserably as an inexperienced gambler! The odds are very much infavour of the house!

Large mutual funds are a good investment vehicle. You can regularly invest a small amount every month in a mutual fund
instead of stocks, realize better growth than if you invested in a stock or two yourself. Mutual funds reduce the risk of losing all your money because they are managed daily by professional money market analysts. Politics and the economy are very difficult to predict. Merely not being able to sell in the first few hours of a crisis can be very very costly to you and your retirement fund. A Mutual Fund manager will be ready and better prepared to properly deal with a major shift in the market so we dont all lose our shirts.

You must Plan and budget to build Savings. If your goals and your expenses are out of balance -- there's no way you can save enough to meet your goals -- make a first pass through your expenses, seeing where you can trim them. Even consider lowering your goals a little.

It is usually much easier to save $100.00, than it is to earn an extra $200.00 because of the taxes payable. Roughly $100 in tax must be paid on that extra $200.00 you earn based on your middle class tax bracket. So planning yor retirement at a later stage in your life, starts with a change in priorities. Begin spending less rather than trying to work overtime to earn more. You may have to do without some of those "nice to have items" that you are dreaming of, or you may end up having to eat cat food in your later years if you don't!

Once you've got some savings accumulated, keep three months worth in a bank account for short term emergencies. Liquid assets are the easiest to get your hands on when yo need them. Dont worry about making big interest on this money. When you have your emergency money saved, we can talk about savings-building options, to meet our goals. Once you have your short term nest egg squirrelled away, you can begin regularly contributing to long term investments for retirement.

Can You retire at 65? Because of modern medicine, our life expectancy is longer. Much longer now in 2005 than it was in 1927. Whereas, we used to live until an average age of 61, we now live to an average age of 78! Do you know? The chances are that if you live to be 65, there is a 25% chance that you will live well into your 90's today.

There is a big problem with this because of our life expectancy, we need live longer on our retirement savings, much longer! So it is harder to retire comfortably today! This means that if you did not start saving significantly when you were young, most likely you will NOT have enough money to live well, for very long, after you are retired, unless you win the lottery. But don't panic! The
situtation is still not that desperate.

In fact, Financial advisors are now telling older people not to retire at retirement age, but instead, keep working. Work, even part time, as long as you can after the official retirement age. This helps to build furthur savings or at least stretch the savings you did have so you can live well in retirement longer and wealthier. The bottom line is, we all need a lot more savings and even so, one can no longer retire well on savings alone - at least not for 20-30 years of retirement - thats for sure!

What if you dont feel like working into your 70's? What if Mopping floors at Walmart and flipping burgers for minimum wage at MacDonalds, until your 70, is not for you? This is the million dollar question!

Remember my friends statement: "One good investment is worth a 'lifetime' of labor."? If you have an investment that is
bringing-in income, month after month; monthy income for the rest of your life , then you have succeed in securing a wealthy retirement for yourself. You can retire and not worry about running out of savings! Cool. What kind of investment are we talking about? We know real-estate rental properties are such a means because they are not a lot of work adn they bring in money month after month. This is not the only way though.

We are lucky today. We have some really good options for earning money now. In fact, because of the internet, we have the entire world as our marketplace now. Via the internet we can all have a home based-business and a customer base too! All we need is an internet business that we can tend to a few hours a day...a business that will generate monthly income for us 24/7/365 days a year, for the rest of our life.

Here are some Recent Internet facts and Figures:

1. By 2007 there will be 1.1 billion Internet users worldwide. - IDC, 2004

2. Worldwide broadband subscribers exceeded 150 million in 2004. - Point Topic, 2004

3. Over 40% of all Americans have made a purchase online. - NDP Group, 2004

4. Over 75% of online consumers do not care whether an online store is run by a large or small company. - TNS, 2004

5. $1.6 trillion was made via e-commerce in 2003; $7.1 trillion is expected in 2007. - Source: IDC, 2004

6. A recent UK study indicated that 82% of Internet users go online to research products and services. - UK Stats Office 2004

7. More than 60 million Europeans now shop online, an increase of 50% since 2003. - Forrester, December 2004

8. US online retail sales will more than double over the next six years, reaching $316 billion by 2010. - Forrester, Aug 2004

9. 61% of small and mid-sized enterprises believe the Internet is a significant advertising medium.-The Kelsey Group, Nov 2004

10. In 2004, paid search advertising grew by 51% to $3.6 billion in the US alone. - eMarketer 2004

The internet has big potential and opportunity that we did no have back in 1927. It should not be overlooked or under-estimated!

If you can save more, sooner and earn more longer; you will have secured yourself a fabulous retirement! Hence the name of my website http://www.BetterRetirementSooner.com

Happy Retirement!

About the author:

email: jtmcnaught@detailsinstantly.com
Re-print Rights: You may use this article in it's entirety, all that I ask is that you contact me with an email here: ReprintRights@BetterRetirmentSooner.com to let me know. Thank You!!
------------------------------------------

Circulated by Article Emporium

Read Articles:

The Term Sheet�s Role in Raising Venture Capital

E-currency Exchange Trading

HomebuilderStocks.com � Exclusive Industry Inte...

RenewableEnergyStocks.com, Reports on Increasin...

RenewableEnergyStocks.com Reports: �New Astris ...

Venture Capital Negotiating Issues

SAFELY PROTECT YOUR HOME BASED DREAM OF RETIRIN...

IS THE BEST RETIREMENT BUSINESS RIGHT FOR YOU?

Residual Income -- Making Money while You Sleep

Why Your Internet Business Is Like The Stock Ma...

Buying Overseas Property

Sales Process - The Secret to Closing More Sales

Forex Trading: Great Opportunity or Scam?

Buying Beach Houses in New Zealand: Real Estate...

Buying a Franchise

Learning from Voom

Forex Trading Online - 7 Reasons You Should!

An Untapped Resource For Finding Your Ideal Ho...

Going Broke Committing To Your Job? A Home-Base...

Sales Process - How to Avoid Wasting Time on Pr...

Poverty in America: Over 35 million living belo...

HomebuilderStocks.com Reports: Commerce Departm...

10 Resourceful Things You Can Do With A Product...

Alternative Retirement Income Options in 2005

Buying a Timeshare Resale: Seven Tips For Success

HomebuilderStocks.com Reports � Homebuilder Sec...

Why Should You Have a Business Plan?

Foreclosure Home Deals

The importance of planning

Is It Necessary To Have a Business Plan?

Sales Tax vs. Income Tax

Residential Income Property Financing: Part 2 of 3

You Are What You Wear

Is It Worth Becoming a Partner?

HomebuilderStocks.com - Reports This Week: Reco...

IndiaStockMarket.com Presents �Twenty six blue-...

HomebuilderStocks.com Reports �Homebuilder Stoc...

ISO 9001 Registration � 8 Steps for Success

Online business is a real business like all oth...

Make an Informed Decision Buying a Forklift

More Article Pages 1 - 2 - 3

How Investment Plans Work
by: John Mussi

More people are choosing investment plans than ever before. With the rising cost of living and the growing insecurity about the availability of many retirement funds, many individuals are looking to investment plans to begin a nest egg or to make some additional money via investment without having to spend a lot of time purchasing stocks and bonds.

Investment plans allow individuals to simply purchase a specific amount of stocks, bonds, or indices on a regular repeating basis, cutting out a large part of the hassle while allowing for some of the main advantages of investment.

If you've been considering an investment plan but aren't completely sure what they might entail, the following information might help you to decide whether or not an investment plan is the right investment option for you.

The Mechanics of an Investment Plan

Basically, an investment plan is a method of making multiple investments over time at regular set intervals. The funds for the investment are taken from a cheque, savings, or money market account automatically, and are used to purchase stocks or bonds that you have decided upon beforehand. In most cases you can change the amount, frequency, or purchased stocks or bonds of the automatic investments at any time, though depending upon the broker through whom you're doing the investments you may be subject to fees or penalties especially if changing details relatively close to the next investment date. Most online investment firms offer investment plans that you can change at any time free of charge.

Deciding How Much to Invest

When deciding how much to invest each cycle with an investment plan, you should take care not to overextend your funds and bring yourself up short. Make sure that the amount that you choose is available and that you'll have it to spare each time your investment comes up� it can be difficult to plan for events in the future, and just because you have a surplus now doesn't mean that you won't find money running tight a few investment cycles from now.

If you feel that you're reaching a point where you won't be able to afford your regular investment, go ahead and reduce the investment amount or put a hold on the next scheduled investment� better to put less in than short yourself afterwards.

Choosing What to Invest In

Making the decision of which stocks and bonds to invest in can take some time, but it's worth it� this is your money that you're dealing with, and you shouldn't invest it without putting some thought and research into your decisions. Find stocks or bonds that have performed well over time, and that are likely to continue doing so� they may be expensive at times, but you aren't making your total investment all at once so it doesn't matter as much.

Don't be afraid to add new stocks or bonds to your plan later, either� this can help to diversify your portfolio.

Deciding On an Investment Interval

You also need to decide how often you wish to make your investments� this will largely depend upon the cycle of your paycheques and your monthly bills and expenses. You may decide to invest once per month, after everything has been paid, or you might want to invest a little from every paycheque.

The more often you invest, the lower the amount of each investment can be� after all, two or four small investments per month might end up purchasing more than one larger one.

Decide on what works best for your lifestyle, and modify it as needed later if it doesn't seem to work out for you.

You may freely reprint this article provided the following author's biography (including the live URL link) remains intact:

This Static Spot is open for sponsor

This Static Spot is open for sponsor