Last week we discussed the importance of budgeting, which allows you to accumulate savings. Saving alone without an investment plan is like planting a seed in dry sand—no growth can happen. You therefore need a solid investment plan for your savings. For your investment plan to be effective, you must know why you are investing. Ask yourself, what is this for (a fallback plan, growth, or income)? How much can you afford to invest and how often? How long do you have to save to reach your goal?
The answer to these questions is what will be used in formulating a solid investment plan. Investment plans vary amongst individuals. The Ndalamas were advised to consider how much they are willing to invest, how long they plan to invest, and what risks they are willing to take to achieve their financial goals.
Choose the Right Investment Plan
An investment plan is the roadmap to achieve your financial goals. It is an optimal tool for ensuring that your savings give you the highest possible return. Investment plans are not one size fits all. You need to consider your financial circumstances, your risk appetite, and the time that you have, to make your goal a reality.
Your biggest concern with any investment is its safety. The safety of your investment may be affected by time, your risk appetite, and the economic environment. Investors have a primary goal of making a competitive return on their savings and avoiding making losses as much as possible. You want to be sure that the funds you are investing in can make a return while minimizing the possibility of encountering any loss.
If that investment is for retirement, what you should care about are the choices you should make to ensure that your account is at its highest value by the time you reach retirement age. Similarly, younger investors have the luxury of taking more aggressive and risk-tolerant approaches over a relatively longer period.
In simpler terms, the younger you are, the more time you have to save for retirement. The older you get, the less time you have. At 35, Pemphero Ndalama will need to get sound advice about his investments for him and his family.
Consistency and discipline are key for the success of anything worthwhile, such as retirement planning. As the saying goes, you can’t have your cake and eat it too. It’s the same as planning your retirement; you will have to set aside instant gratification to reap the benefits of your investments later.
Get Financial Advice
Decisions around your retirement are many, but very important. If you are employed, you will most probably ask, “Is that not what my pension fund is for?”
And in truth, it is, but is it enough to cater for the retirement that you would like?
Pemphero, whose monthly salary is K1,000,000, knows that he contributes towards his pension fund every month. But he does not have an idea whether the amount he will be receiving after retirement from this fund will be sufficient to sustain the kind of lifestyle he wants for himself and his family.
Financial advisors like NICO Asset Managers will guide Pemphero on how best to invest his funds. They will also help him create a parallel pension plan that he can have full control over and invest in a manner that provides maximum returns. This also means revisiting his budget to make sure there is a line for investment—the type of investment would be tailored to his income, expenses, and what he is trying to achieve.
The advice given by NICO Asset Managers is what will help Pemphero still support his family while working on a comfortable retirement plan. As he is working on his investment plan, Pemphero also has to consider creating additional income—this is our topic for next week.
For more information, contact NICO Asset Managers on:
Call Centre: 323