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GTA Consulting
Oct 18 2018
Managing Your Retirement Income  E-mail

By Johnson Ateghie

Retirement is not a time to be idle. Instead, it is a time to make important choices about how you want to live the rest of your life. It could be a time to:
•    Start a new career.
•    Establish a small business.
•    Scale back to a part-time job.
•    Devote yourself to volunteer activities.
•    Spend more time with family.
•    Travel to new places.
•    Pursue interests that you have stored on your "back burner" for years.

Start early to save and plan for retirement. That way, you will have the financial freedom to make meaningful choices in your retirement years. These choices will affect you and your family. Now is the time to visualize your retirement. Now is the time to make sure your retirement dreams come true.

Creating a financial plan will help you begin your retirement planning. Once you have done this, you will be ready to take a closer look at all your sources of retirement income. It is critical that you learn about, and take advantage of, all these sources of income. Only then can you create a secure retirement for yourself to take care of you at old age.
Types of Investment
These are a few of the more common types of investments:
Passbook Savings:
These regular savings account involve little risk if guaranteed by a government agency (the Deposit Insurance Corporation -DIC) guarantees most bank accounts deposits to a certain limit. Earnings take the form of income, but interest rates tend to be relatively low. You can get your cash out quickly, but the interest earned is subject to same-year taxation (I have experienced this myself). This is true even if the interest earnings are left in the account.

Buying a House or Other Property:
There are many tax advantages to real estate investment. Risk can vary, however, depending on the specific property and its location. While return can be high, economic conditions do affect the real estate market. Some houses may offer only a modest return. Liquidity varies, since it could take months to sell a property. This is an area most Nigerian investors have started taking a financial look at in considering investment options.

When you buy stock in a company, you are buying part ownership in the firm. Income or growth in the value of your stock will depend on company profits. How much of your savings should go into the stock market? That depends on how much risk you are willing to take, since stocks can carry a relatively high degree of risk.

Some experts offer this guide: The percentage of long-term savings that you can afford to keep in stocks equals 100 minus your age. For example, at age 30, you can afford to keep 70% of your savings in individual stocks or common-stock mutual funds. At age 48, however, only 52% should be in stocks. The theory is that, as you get closer to retirement age, the percentage of your money that is in riskier investments should be steadily reduced. The global economic meltdown that started in 2008 had greatly impacted global financial assets hence the waning interest in stock investing.

When you buy a bond, you are lending money to the issuer of the bond. Companies issue bonds and so do governments. The issuer promises to pay you a fixed rate of return on your investment, which is sometimes higher than savings and some other money market instruments. Essentially, a bond is an IOU, and it must be paid back to you on a specific date. There are many types of corporate bonds and government bonds, and some of these bonds are tax-free. You may however need to consult your financial adviser for guidance when considering an investment in the bond market.

Certificates of Deposit (CDs):
A Certificate of Deposit is a special kind of savings account. If you agree to leave a certain amount of money in a savings account for a given period of time (such as N50,000 for 18 months), the savings institution will guarantee you a specific rate of interest. These are called Time Deposits, and they generally offer higher interest rates than passbook savings accounts. The savings institution will issue you a Certificate of Deposit that describes your deposit arrangement. Investment rates vary by type of certificate and length of time you agree to leave your money in the account. Penalties are generally charged for early withdrawal. Note also here that the interest earned under this investment option is taxable between 5-10% rate. Commercial papers are also good investment options to be considered.

Individual Retirement Accounts:
Individual Retirement Accounts (IRAs), allow you to invest in a variety of options—mostly stock and bond mutual funds. Depending on the option you choose, safety and growth can vary widely.

Mutual Funds:
Mutual funds, which pool the resources of a large group of investors, are a way of buying stocks, bonds, real estate or other securities. There are some benefits of buying securities through a mutual fund. These include the services of a professional fund manager, who purchases a variety of stocks or bonds for the group. There is less risk than with individual stocks because the fund is diversifying your portfolio. There are enough different types of mutual funds to match almost anyone’s investment objectives. This type of investment is yet to get serious patronage in Nigeria.

Precious Metals and Commodities:
Some people invest in precious metals, such as silver, copper and gold which is currently the toast of investors as the currencies of major economies are reasonably becoming unstable due to economic downturn of these world economies. These investments can be very risky, because their value can fluctuate wildly. So be sure you understand the risks ahead of time. You may also wish to take a chance with commodities. These are generally agricultural products such as cocoa, wheat, coffee or potatoes lately cassava and others not listed here. But remember the risk involved.

There may be other types of investments you may like to engage yourself, which in our opinion are no go areas to retirees. Some of these investments include but not limited to: Poultry farming, transportation business, gambling and several other types of businesses, which we consider as too risky for retirees fragile stability.

[Johnson Ateghie is a certified management consultant, a strategist and business optimization expert specializing in helping business improve operation and grow their bottom line. Get more free business growth resources from []