Explore the best investment options for your retirement Income.
Many people live well past 65 nowadays, so if you reach retirement age with a good portion of money saved, you’ll want to make sure you explore the best investment options for making your savings last and even grow further if possible.
There is no single approach to investment, and this is especially relevant when you’re retired and exploring the best options for preserving and growing your capital. The most important thing to do is to speak to an experienced financial advisor who can conduct a full needs analysis and advise you on short-, medium- and long-term investment options and how best to structure your retirement annuity (options include guaranteed annuity and living annuity, among others). There are different ways to structure your funds and various strategies to explore – one example is where you draw a pre-determined percentage of your capital each year, and another is a bucket strategy with investments of varying terms.
Once you’re retired, it’s not easy to generate new income but one way to make your retirement capital work for you is to invest a lump sum in an investment with monthly returns, such as African Bank’s Fixed Deposit, which currently offers South Africa’s best interest rate of 10.75% on the annual interest pay-out.
Here is a break-down of how it could work for you*:
- Once off investment amount: R1 000 000.00
- Term in months: 60
- Interest payout frequency: Monthly
- Interest rate per annum (monthly payout): 10.03%
- Interest payout: R8358.33
- Total payout: R1 666 656.20
(*Illustrative purposes only. Actual payout could differ due to the number of days in a month and interest rates at the start of the investment. This is not to be understood as investment advice.)
When it comes to shopping for the best interest rate, always compare the annual interest rate amongst service providers, not the Expiry rate interest rate. Sounds a bit confusing? We break it down for you in this blog post: Want the best interest rate?
It is important to remember to diversify your portfolio and to never invest your money in one single avenue. It’s also advisable to remember to keep enough easily-accessible cash for emergency funds as well as one year’s worth of living expenses.