How much money you need to have saved before you retire will depend largely on what sort of lifestyle you would like to enjoy in your retirement. There will also be other factors to consider like what level of day to day expenses you will have, where you intend to live, if you are likely to have health concerns, or even what your anticipated life expectancy is!
The earlier you are able to start planning for your retirement, the better off you will be, even just a few dollars a week can make a huge difference depending on how you invest your savings – after all, an IRA has a contribution limit of around $6,000.
When you are planning on investing in your future you will need to look at your current situation, where you want to be, and decide on the level of risk that you should have in your portfolio. If you are younger (under 30 years old), you can likely afford to have a higher risk range of investments, that potentially will provide a higher return, while if you are in your middle years you might like to have a more conservative approach.
If you are able to speak to a financial advisor, they will be able to offer you some guidance as to which level or risk will best suit not only your age, but also your current financial situation and your likely future situation. For example, if you are currently in college but have high prospects of a well-paying job shortly, you might be able to take bigger risks than if you are in a low paying job and are likely to continue in a similar situation.
Stocks, Property Or Resources?
Generally when you are looking at investment options you will be looking at either putting your money towards financial investment in a company or government, purchasing residential or commercial property, or into resources such as oil, precious metals, base metals and energy – either directly by purchasing something like gold bullion, or indirectly by investing in an exploration company or by buying Gold exchange-traded funds.
Each type of investment has pros and cons, which will also vary depending on how much you are able to invest. While investing in gold is generally seen to be a solid long term investment http://www.mpsecurities.com.au/us-gold-price-finishing-consolidation-86/, you may also find that there will be fluctuations in price, and that you need to invest a larger amount over a period of time in order to get a good return.
While with stocks, there are no ‘sure things’, if your risk level is able to take a hit then you may look to invest at the seed or startup levels for the highest potential return, however this may result in a complete loss of your investment if the company fails. If you are leaning towards stocks as a good idea, it is usually best to either go with a managed fund or to at least ensure that you have a diverse portfolio that will be able to weather a financial storm.
Generally, property is a large investment option, but does tend to provide a certain level of security. However, as we saw with the GFC in 2007, this is not a sure thing either (see here). The rewards of property investment will also depend on where you are buying, whether you are looking at investing in the USA or internationally. There are also options for you to invest in a property fund rather than purchase property yourself.
Education Or Income
One thing to think about is also how much money you make now, and what your earning potential could be. If you are doing a job that you love, then you will have a great deal of enjoyment no matter what the income level is. However, if you’re not in love with your job, and it doesn’t pay overly well, then look into education options that could lead to either a more enjoyable position or a better paid role.
Going back to school as an adult and studying while working is not necessarily an easy journey and will usually take longer than just quitting your job and going back to school, however, if you can maintain your income level and keep looking at your education as being working towards securing your future.