A HSBC report released during the Spring has revealed that the world is in the grip of pensions crisis, with the vast majority of citizens in a number of developed economies failing to save the necessary capital to fund their retirement. While this is primarily due to an unstable employment market and the lack of long term job security, it also suggests that the current generation of adults are not prioritizing saving money through the course of their working lives.
The fact remains that individuals cannot afford to rely on state or company pensions in the current global economy, as there is no guarantee that these will deliver tangible returns, Instead, there is a pressing need to maximize your own income and seek out viable savings vehicles, whether these are in the form of high yield accounts or more risk laden investment options. As long as they produce long term returns, then it is possible for you to assume control of your own financial destiny.
Appraising your Savings and Investment Options
With this in mind, it is worth reviewing the options at your disposal and determining which one best suits your personal circumstances. Consider the following: –
? Investment Savings Accounts: If you are not blessed with a significant amount of disposable income or prefer to adopt a risk averse approach, then investment savings accounts may be the option for you. Offered by leading national banks, these accounts allow you to commit your hard earned money which is then invested by leading financial professionals. The returns are variable, depending on whether you deal in low risk financial products or higher leverage derivatives. These account options at least allow you to partner with a reputable financial institution, and achieve a beneficial risk reward ration.
? Stocks and Shares: Despite the risks involved, investing in stocks and shares can be very rewarding, as it gives you the opportunity to purchase shares in a company. While a high level of disposable income is necessary to make this method of investment worthwhile, the potential return is immense. Before making this type of investment, make sure that you use a stock screener to search for investments that interest you. This screener allows you to search for stocks within certain parameters, making finding a stock much easier. For those of you who have a greater understanding of risk, then investing in stocks and shares may be the ideal option for you. This method of investment is suitable for individuals with a relatively high level of disposable income, and it essentially allows you to purchase individuals shares within a company. The risks associated with this practice are especially pronounced in a stagnant economy, as the potential return of your investment rises and falls with the companies valuation. Timing is therefore critically important, as is the capacity to adopt a long term outlook and utilise analytical tools available.
? Fixed Rate Bonds: If neither of these investment options strike the desire balance between risk and reward, then you may wish to consider placing your money in fixed rate bonds. These securities offer fixed interest rates and terms, so that as an investor you can calculate exactly how much you will accrue on an annual basis. There is little risk associated with investing in fixed rate bonds, except for the fact that they are provided by governments and corporations as opposed to well established banking organizations. If you earn regular income and hope to achieve a return that is both reliable and worthwhile, then investing in fixed rate bonds may be the ideal option for you.
The Last Word
The current pensions crisis is a global epidemic, but the issues that it has created are by no means insurmountable. While state and company funded pension contributions can no longer be relied on, however, those in gainful employment do have the capacity to seize control of their own destiny. By appraising various savings and investment options and identifying which ones best suit your financial goals, it is possible to build long term funds that can help to ease your transition into retirement.