Maybe your age is still in the productive category. You are still able to finance the needs of families and can spoil yourself. But what if the age is growing older, 20 or 30 years from now, when physically you are no longer productive?
Whether the savings in a bank account capable of pursuing the exact value of goods will continue to rise each year?
Recalculate your balance. If calculated with inflation growth of 10 per year, and interest on savings is only 5 percent per year, you'll see the extent to which a conventional savings in banks have strong purchasing power to offset future inflation.
Retirement terms apply to a person who has been productive of a certain age, 50-60 years old. But not a few people at this age are still working and earning a living because they do not set up a pension fund since I was productive. Period of productivity could be reduced, but the cost of living continues to rise. You also may retire, but the cost of living will never retire.
Important questions that must be answered is how do you prepare before retirement?
There are several options to prepare for your retirement fund. Business, conventional savings in the bank, or investment. Each has more value, including:
1. Saving regularly
Each person must have a conventional savings account at the bank of choice. For employees, the money set aside a percentage of salary for savings. This method is valid only if it is more possible for you.
But be prepared to take the risk, namely:
Declining purchasing power in the future, meaning that you save the money in the bank will not equal the value of future needs.
Taxes. If you save a hundred million in the bank, the government would cut taxes by 20%. That is, the value of the savings fund will decline.
Inflation with an average growth of 10 percent per year. That is, the next 20 years the value of your fund is not able to offset the high prices of basic necessities. Because interest is only in the range of 5 percent, inflation is still not cover the needs.
Undisciplined attitude. Many families set a range of expenditure items first, then "rest" saved. This makes the savings are not optimal and are likely to be sacrificed if there are additional expenses beyond the routine.
Open a side business can be very profitable, because usually by opening a business, can be obtained great results in a faster tempo. But you must be prepared with all the consequences of business.
If the business becomes an option, it will be very progressive growth of the money. Especially if you choose a business that does not require such large capital consulting services. What is the value of the funds will be collected this way will depend fully on your business running a business.
Amounts can be very large, which means your retirement savings in the future any high-value assets and productivity in line with the growing business.
Investment instruments may vary. Select the most appropriate for you, whether stocks, bonds, mutual funds, insurance, or others who are long-term investment (long term investment).
Talk of insurance, savings products futures or plan today with insurance features. Thus, target funds or desired plan can still be achieved despite the things that are not desirable.
The value of investment at this stage to return to your goals, how much the pension fund that you want to collect in a certain period of time.
In essence, select the investments that can grow the funds on deposit with reference to the future value or future value. With proper planning, at the time retirement arrives (could be an early retirement), your savings are able to finance your life entirely in the future.