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RETIREMENT and PLANNING (part two) Pension and Property

As the years go by and one becomes increasingly conscious of the days ahead were fixed income might not be possible, plans begin to take form and one is faced with how best to invest for those rainy days ahead. Should you invest in pension schemes or property? Most governments today make it compulsory for employers to have a pension plan for their workers. You should know how the pension plan run by your company works by knowing your eligibility and the extent of converge. You should know how the pension plan is going to affect your family and marital status entitlements also ask your company for a benefits statement, this will enable you know the worth of your benefits, also know if the pension plan is transferrable in the even of a job change. In the U.S.A retirement plans fall under section 401(-) of the internal revenue board, and this section govern the way pensions and benefits are run. One of the plans under section 401 is the 401(k) plan which allows employees make monthly contributions from their salaries before tax towards their retirement.


As I stated in the first part of this article, liquid money by default depreciates in value as time goes by, so therefore how you save is of great importance. Know what investment plans are available and seek advice from a professional. Don’t put all your savings in one investment look for a couple of investments available and invest. Distributing your savings into different investments goes a long way in reducing the risk involved and will see an increased return on investment. You should be flexible in investing, flexibility in investment is the ability to change your investment mix in order to minimize risk and maximize returns. Minimizing risk and increasing returns on investments will only be possible if you are knowledgeable and have insight on market trends, this will only be possible through professional consultation. You should note that financial security and knowledge are directly co-relational. When setting up a retirement plan, tax benefits and returns on savings are given as an incentive. The premature withdrawal of these funds will lead to a loss of part or all entitlements that come along. In the event of a job change, pension schemes organized by your company can be transferred to your new company or to a government run pension scheme. Apart from investing in pension and other retirement schemes, you would want to get some income in your later years instead on wholly relying on savings. Investing in property is a good way of generating an income. Property offers returns through rent which come in monthly, they can also be turned over to managers to manage the building from maintenance to the financial aspect of it. According to the property data company IPD, over a ten year period property has provided an estimated annual return of 11.2% as compared to the 5.1% seen in equities and 7.6% in bonds. From the figures investing in properties is very attractive but it also has its ups and downs. While investing in property is a long term investment plan we should learn from property crisis in countries such as Greece and Spain. If you’re willing to sit bad times out that’s okay, but it is not wise to totally ignore pension schemes.

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