As the pandemic seems to have slowed down we still don’t know what the long-term health effects might be or the financial damage.
The financial distress COVID has caused will have a ripple effect on most of us. Someone will have to pay for the billions that have been poured into the pandemic, and this may affect your retirement. Taxes may be increased, retirement age extended, job losses and increases in healthcare expenditure in the future. Does this mean you need to change your savings strategy and if so, – how?
If you are employed
If you are working and saving for a retirement through a company based savings plan, 401k or privately setup plan, it is smart to stay on course. If you haven’t yet set up your own savings plan, it is time to do it.
During the pandemic, those who work, have more cash available due to less dining out, travelling and leisure activities. This could be the opportunity to put the available cash into your savings plan.
The current global situation, has shown how important it is to have savings, independent from the government or your employer, which would be available to you in case of an emergency.
No one could have predicted the pandemic and a lesson should be learned.
If you are already retired
For those who have already retired from workforce perhaps you need to see whether your retirement income – from social security and other sources such as systematic withdrawals from your retirement account, will be enough to last you.
As the life expectancy age is increasing so are the living costs including healthcare. Only in the past year medical care rose by 4.6% and the overall cost of living increased by 2.3% according to the Bureau of Labor Statistics’s Consumer Price Index. In relation to this, the wages have shown only 0.2% increase.
Prepare for what is ahead
It is a good time to review your portfolio. The Pandemic has resulted in some volatile stock market swings. Dow Jones, for example, one day is up by hundreds of points and down the next. If you can afford the volatility and have cash to wait until the stocks regain their value and provide you a return, then it’s may still be the best opportunity for long-term growth if you are in your 30s to early 50s.
If you are retired and hold a large stock portfolio, this may not be ideal. With the stock market being too volatile and by the time you need to sell your stock, you may lose money. Additionally, stocks do not provide a regular retirement income. They are mainly to be held and sold when cash is needed.
If you are less than 10 years from retirement or retired, then you may need to consider keeping your retirement fund in bonds and fixed income products. These products will safeguard your retirement fund and provide a regular income that you need without using up your savings.
Part of your savings should be in short-term bonds. This will help you weather any health, financial or world crisis that may lie ahead. These are also a great solution if the market plummets or you need cash quickly.
Short-term Bonds
You have an array of different short-term bonds.
The Vanguard Short-term Investment-Grade Fund: Average total return: 2.55%
2. The Fidelity Short-Term Bond Fund: Average total return: 1.98%
3. The Shwab Short-Term Bond Index Fund: Average total return since inception in 2017 was 3.16%.
12-Month Fixed Income Plan
12-month interest: 10%
The plan is provided by GG Capital, a company based in Switzerland, which uses the funds to meet customers growing demand for wood products. Their customers include Shell, Coop, BYGGMAXX, S-Ryhma and ICA Gruppen.
For over 10 years, they have been supplying wood products to ten different countries including Finland, Norway, Sweden, Denmark and the Baltics. They are the largest provider of firewood in Finland, supplying over 50% of the market with birch and adler wood products.
The Plan provides you with a regular fixed income of 10% per year. This is paid directly to your bank account every three months. At the end of the 12-month term, you can either cash in or renew at the same rate and continue to enjoy a steady stream of income. There are no administration fees.
Contact info@crewinvest.net or click here to request the factsheet.
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