When it comes to retirement planning, what are your primary investment objectives? How do you make your life after work as comfortable as you wish?
Retirement or no retirement, it’s highly important to ensure that you knew how to establish your primary investment objectives as well as getting it right.
Nowadays, many pensioners are struggling with life after retirement because it’s an entirely different life.
Retirement life doesn’t come easy; it’s a life that you will only enjoy if you have properly planned ahead for it. So, are you ready for retirement?
Key factors in retirement planning
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Most importantly, there 3 main key factors you should consider in your retirement planning. These key factors which include time horizon, cash flow needs, and inflation, will have direct impacts on your retirement planning.
Another important thing to consider is to establish a primary objective for your investment or portfolio. But what should your terminal value objectives include?
A good and smart way to determine your investment objectives is to define your terminal value objective. This is the amount of money you plan to have at the end of your portfolio’s time horizon.
#1]. Maximising terminal value
With these objectives, you stand a better chance to grow your portfolio to fund your retirement.
You are looking to increase the purchasing power of your assets as much as possible over your time horizon.
#2]. Real value of the portfolio
You have to maintain the real value of the portfolio. This is the main goal of a conservative portfolio strategy.
Maintaining the value of the portfolio in real terms, or protecting the value of the portfolio against inflation.
With this objective, you aim to maintain your present purchasing power at the end of your time horizon.
#3]. Depleting assets
This is particularly when you have no desire to leave any assets behind. However, assets that do not have a limited life or that keep their value (such as land and investments) may not need to be depleted.
#4]. Targeting a specific ending value
This objective has to do with the desire for a specific ending value, perhaps to pass your portfolio value to children as an inheritance in most cases.
Good books to read
No doubt, stock investment is like rocket science to some people. However, it’s easy if you understanding how stock market investment work and how to spot the right stocks.
Luckily, there are good books on stock investment out there that you can read. However, what most of these books failed to do is explaining stuff like how skill relates to luck, how powerful are large numbers, and the nature of risk to expect.
If you want to further enrich your knowledge on stock investment, then read books on stock investment to understand how it actually works.