Having a comfortable retirement is one of the foremost concerns of forward-thinking individuals. After working for the better part of their lives, they want the assurance that they will be able to maintain a good standard of living when they retire. 

While you can probably get away with saving for retirement through a pension plan like the National Social Security Fund (NSSF) or one offered by private companies, the amount you get from such may not be sufficient to support you and your family once you are no longer actively earning. For this reason, financial experts recommend investing for retirement. Not only does this give you peace of mind, it also allows you to benefit from compounding interest, which grows your pension even further. 

How do you ensure that you get the most out of your retirement investment plan? Here are a few tips to make it easier. 

1. Start Immediately

The most important piece of investment advice you will ever receive is to start as early as you can with whatever you have. This also applies for retirement savings. The earlier you begin, the sooner you start to benefit from compound interest. Someone who invests for their retirement at age 25 will have so much more than another who starts at 35, assuming they retire at the same age. 

On top of that, starting early helps you build discipline and will reinforce your will to keep investing as you watch your retirement fund grow.

2. Understand your Options

Because you are investing for a very specific purpose – retirement – your strategy needs to be formed with this in mind. You will want an investment that provides reasonably high returns, bears low risk and has a long time horizon. You should also think about inflation and how it will impact your portfolio. Seek to understand what options are available to you in this regard. 

3. Create an Investment Plan and Stick to it

You already know what you want to achieve and have a good idea of what options are available to you. The next step is to create a plan detailing how much capital you will put up, how often you will add to it, which asset classes you will pursue and so on. A trusted financial advisor can assist with this process. Having created the plan, you must stick to it, which will require patience and discipline.

4. Limit Access to your Retirement Fund

You should only access your retirement portfolio when you retire. As the fund grows, and various financial needs arise, you may be tempted to dip into the fund a few times. Not only would this reduce the total amount that is available to you, once you start withdrawing, it may be difficult to stop. Limit your access to the fund in all but the direst of situations. Use other means to cater to financial emergencies. If you are worried about not having the discipline to leave the funds untouched, leave instructions with your fund manager.

5. Manage Investment Costs

Investing comes with certain costs. If you do not manage them effectively, they will eat into your portfolio, so much so that you fail to achieve the retirement benefits you are aiming for. Costs to keep a close eye on include taxes, transaction fees, management fees, performance fees, and surrender charges. 

You can maintain your lifestyle upon retirement by investing prudently, with the help of the abovementioned tips. In fact, you may even retire early if your investment portfolio grows to the level you need it to. To learn more about investing for retirement, email clientservices@sib.co.ke.

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