Saving and investing for a peaceful retirement

Achieving a comfortable retirement: everyone's dream, right? But how can you accomplish it in these uncertain times?

By adopting long-term planning and investment strategies, you can save and invest, allowing you to build a valuable retirement nest egg for your golden years.

A comprehensive strategy

A common misconception about financial planning is that it stops at budgeting income and expenses. While budgeting is a key element of financial planning, it encompasses much more. It is a holistic strategy for your entire financial life, extending to retirement planning, investment, and even estate planning.

Plan your retirement

The goal of this planning is to build savings that will enable you to maintain the desired lifestyle after retirement. To do this, you need to determine the amount of money needed for your pension and the time you have available to save.

For example, if you are 40 years old and want to retire at 65, you have 25 years to save. Factors such as inflation, potential salary increases, and other expenses that may impact your savings need to be considered.

Investment strategies

Once you have determined the amount of money you will need, you can develop an investment strategy to help you achieve your goals. Here are a few tips:

• Diversify your investments by allocating them across different asset classes. These can include stocks, bonds, mutual funds, real estate, or cash. Diversification helps reduce risks and maximize returns.
• Invest a fixed amount of money on a regular schedule (monthly or quarterly, for example). This averaging strategy helps you take advantage of market fluctuations and prevents over or under-investing.
• Reinvest your gains for higher returns. Remember that even small investments can grow significantly over time.

Real estate: building a solid retirement

We all know that real estate is an ideal long-term investment. And the first step when thinking about retirement is to have purchased your primary residence. Paying off your mortgage before entering retirement allows you to not only stop paying rent but also gives you the option to sell your property (once the children have moved out, of course). Downsizing to a more suitable home for two allows you to have a larger capital for your leisure activities.

The second element is investing in rental properties. During your working years, the rental income (along with potential additional savings) can help pay off the mortgage(s), making it a financially neutral or nearly neutral operation. Once you retire, the rental income becomes a sustainable supplementary income that helps compensate for the loss of regular employment income. Real estate investment is, therefore, a valuable aid in maintaining your purchasing power.

Of course, your personal situation should be taken into account during your working years. If your goal is to increase your income in retirement, it doesn't mean sacrificing your current lifestyle. Enjoying life is also about treating yourself, and high monthly mortgage payments could seriously affect your purchasing power.

Another advantage: real estate investment is also a good way to build wealth to pass on to your children.

Preserving capital for your children

A pension plan should, at a minimum, provide enough capital to cover financial needs until the end of the beneficiary's life. However, most parents want to pass on part of their wealth to their descendants. This desire for succession planning can be an integral part of a pension plan. It involves either saving more when you're young or reducing the pension income received.