Finance and Career Magazine: Top 6 Rules for Retirement Investing

Planning for your retirement is very important. It might mean the difference between living from hand to mouth and living comfortably when the time for retirement comes. As with most things in life, there are factors that are under your control when you are saving for your retirement fund. Knowing what these factors are and what rules to play by when investing for retirement, will go a long way in helping you attain your goal. The following are the most important rules to follow, while planning for retirement investing.

Prepare Early Enough

Most people make the mistake of waiting until the last minute before they start investing for retirement. Don?t go down this road; start by saving for your retirement fund early enough. Remember that the three most important factors that will impact on your investment are the rate of return, time and the amount you have invested. This therefore means that time is of utmost importance when you are investing. Even if this means taking unsecured loans to meet your goals, go for them early enough.

Have Different Investment Portfolios

Ever heard of the saying ?don?t put all your eggs in one basket?? This also holds true for your retirement investment. By having different portfolios, you will be able to achieve the various financial goals that you are aiming for. For example, you can have a portfolio for your child?s education, one for medical care and another one for your retirement. Because of the time factor, you will find how much cash you devote to a certain portfolio can change as time goes on.

Use the Compounding Effect to Your Advantage

The compounding effect comes into play when you take the returns of your retirement investment and re-invest back. You should therefore make it a priority to re-invest all the interest you have earned throughout the year back to your retirement investing account so as to earn more interest the year after. It is simply unbelievable how this re-invested cash grows in leaps and bounds over a certain period of time.

Diversify Your Retirement Investment

The purpose of diversifying your retirement portfolio is to spread the risk. Take note that a good investment is one, which is not affected much by market volatility. After all, if your investment is so sensitive to supply and demand swings, you might wake up one day and realize that all your savings have been wiped away. Diversifying, therefore, helps you to avoid such pitfalls and ensures that your portfolios are stable from the market dynamics.

Keep Emotions Out Of Your Investment

It is human nature to become overconfident when things are going fine and panic when things go wrong. This is simply not the best way to run a retirement investment. Suppose you have taken unsecured loans and invested into the stock market. Should the market crash and you panic, you are bound to sell your shares at a dirt-cheap price and lose a lot. However, should you stay calm during this time and wait until the stock market goes up again, you will have saved your investment from losing value and may even have a better chance to make a killing.

Seek Financial Help

A lot of people fear to seek information from experts even when they don?t know what to do. By talking to a financial expert about your plans, you will get insight on which areas to invest and which ones to avoid. Also, you will learn a lot about investment fundamentals and how to invest wisely. For example, you might have thought of taking unsecured loans to finance your home but get to know that the best thing is to invest this money in the stock market where it will grow and bring you interest.

Author:

Janice Thompson.

Source: http://www.financemagazineonline.com/2012/10/top-6-rules-for-retirement-investing.html

uc berkeley harrison barnes brett ratner stevie nicks anchorman capybara duggars