A good retirement plan investment is one that helps you achieve financial freedom before and after retirement.
The following are the characteristics of a good investment for retirement:
1. It should be an asset that grow in value over time
2. The asset growth rate must be higher than inflation rate in order to secure your investment
3. The yearly maintenance cost should be low
4. It should be easy to convert to cash if you need to
5. The growth (or re-sale) value in 10years should be at least 9 to 15 times your initial investment
When you attain the mandatory retirement age and you're forced to retire, your monthly salary will immediately stop coming.
At that point, you need money from your retirement plan investment to pay your bills after retirement.
Of course, you can also get some monthly income from your monthly pension payment.
However, most people's pension income is meagre . . . sometimes less than 25 percent of what they used to earn when they were in paid employment.
Therefore, the best path to guaranteed retirement income is a retirement plan investment that meets the five criteria listed above.
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The inflation rate in many third world countries is as high as 10 to 15 percent per year.
What that means in reality is that the value of your retirement investment depreciates by 10 percent every year . . . if we take the lower value of 10% inflation year on year.
Consequently, we recommend that you invest your retirement savings in a retirement investment scheme that safeguards your investment against the impact of inflation . . . if you want to achieve financial independence before and after retirement.
Here's one bad advice that many retirement planning consultants give that have led many employees into penury after retirement.
Some retirement planning web sites (and retirement consultants) tell employees they need to save X amount of money while in paid employment and then maintain a strict budget after retirement so they can live off their retirement savings until they die.
For example, many retirement planning web sites tell people they should have at least $1,000,000 (one million dollars) saved up for retirement in order to have a happy retirement life.
Sounds like good retirement planning advice on the surface.
But stop and think.
If you focus on saving, say, one million dollars for retirement (and that's all you've got to finance your retirement life), what will be the impact of inflation on that money you have saved up in your retirement savings account?
By how much will that money have grown in value by the time you're due for retirement, taking into consideration inflation?
Let's explore this.
Suppose your retirement plan investment is to save a million dollars in your savings account by the time you're due for retirement.
Suppose too that your bank gives you 3% interest on your bank savings and the inflation rate in your country is average of 10% year on year.
If you keep one million dollars in your account for 10 years, the value of that one million dollars will become about 1.2 times its initial value after you have factored in inflation.
If you keep the money in the bank for 15years, it will grow to 1.4 times its initial value after you have factored in inflation of 10% year on year.
Now pause for a moment and think.
What if you decide instead to invest that one million dollars in an alternative investment opportunity that offers you an average of 20% return on investment year on year?
In this second case, the value of your investment will grow by 8 times the value of your initial investment in 10years and 25 times in 15years, after taking into consideration the impact of inflation.
Which do you prefer?
1.4 times your investment or 25 times your investment?
Of course, the individual who gets 25 times his initial investment will enjoy greater financial independence after retirement than the individual with 1.4 times his initial investment.
Saving millions of dollars in your retirement savings account to finance your retirement life is a terrible retirement planning strategy.
Invest at least half of the money you currently have in your retirement savings account in retirement investment opportunities that offer at least an average of 20 percent return on investment year on year.
This is the best retirement plan investment!
Click HERE to see an investment for retirement that offers 20 to 30 return on your investment.
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