Investing in retirement is an important process for every age, but the same strategy should not be used for every stage of life.
Younger people may take more risk. Older people have higher incomes and it is good to make the most of their strong years.
Start Planning Retirement: Your 20s
Although you have recently graduated from university, use this time to start investing. Whether it's with a supplementary pension company or a savings plan that you create yourself, invest what you can, even if you can't set aside 10% of your income.
At the moment, you have the biggest advantage over everyone else, namely time. Due to the so-called compound interest rates*, what you invest in the next few years has the potential for the greatest growth. Since you have more time and opportunity to withstand the dynamics / volatility of the market, it is good to invest mainly in stocks and minimize your participation in bonds or real estate investments.
Career focus: Your 30s
If you postpone investing due to traveling to other countries, additional courses or specializations, your 30 is the time when you need to start deducting from your income. You are still young enough to benefit from "compound interest" *, but old enough to invest 10% to 15% of your income.
Even if you are now paying off a mortgage or starting a family, contributing to your retirement should be your top priority. There are still 30 to 40 active working years left, so you need to increase this contribution.
You can still take some risk, but it may be time to add lower-risk assets such as bonds to your portfolio to achieve balance.
Focus on retirement: Your 40s
If you have postponed retirement savings until you are in your 40s, or if you have been in a low-paid position and have moved on to something better, now is the time to start investing in retirement. You are in the middle of your career and you are probably reaching your maximum revenue potential.
Even if you save your money on childcare or continue to pay off your mortgage, retirement savings should be at the forefront of any financial decision. If you are careful, you have enough time to catch up. It is always a good idea to seek financial advice if you are unsure of which funds to invest in. Keep in mind that investing in stocks implies a better return, but also carries a higher level of risk.
Stick to investments that have a return and avoid deals that are "too good to be true."
Almost retirement: the 50s and 60s
As you approach retirement age, now is not the time to lose focus. Now is the time to be more conservative, because you really need your savings.
Low-yield funds that invest in bonds and money markets can be a good choice if you don't want to risk all your money. Now is the time to finally make an account of the funds you have and when is the right time to retire. Getting advice from professionals will help determine the choice of the appropriate time to retire and will strengthen the sense of security.
What is the main conclusion?
A Chinese proverb says: “The best time to plant a tree was 20 years ago. The next best time is now.”
This attitude is also the basis of investment. No matter how old you are, the best time to start investing was 20 years ago, and the second best time is now. It's never too late to start.
Just make sure the decisions you make are right for your age - your investment approach should follow you over the years. It is also a good idea to meet with a qualified expert to discuss various suggestions and options.
The investment consultants of Compass Invest AD will give you detailed information about the investments in mutual funds and will answer your questions.
* Compound interest - "Compound interest is the eighth wonder of the world. He who understands it - benefits from it, he who does not understand it - pays for it "Albert Einstein
The effect of compound interest makes your money an extremely powerful means of generating income. Compound interest is the process of generating income from the reinvested income of an asset. To work, it requires two things: reinvesting profits and time. The more time you give to your investment, the more the profit potential of the initial investment will increase.
**The material is of an educational nature and is not advice for buying or selling financial assets. Trading on the stock markets can be extremely risky and bring not only profits but also serious losses for investors. Make sure you are fully aware of all the risks before you decide to invest in the financial markets. If possible, it would be good to consult with certified financial advisors.
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Important information: You should keep in mind that the value of the shares and the income from them may decrease, profits are not guaranteed and there is a risk that you will not return the full amount of the invested funds. Past performance is not a reliable indicator of future performance, unit prices and their returns may decrease as well as increase, and investors may not receive the amount they originally invested. No profits are guaranteed. Investments are not guaranteed by a guarantee fund set up by the state or another form of guarantee. The prospectus and the document with key information about the investor can be obtained on paper and/or electronic media in Bulgarian in the office of the management company on the address: Sofia, 19 Georg Washington Str., 2nd floor every working day from 9 am to 5 pm and on the website of Compass Invest JSC.
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