Systematic Investment for Retirement

~Proverb~

As You Sow, So Shall You Reap

The process of investment has two main stages, the first involves accumulation of income and savings and the second involves getting returns from the investment. It is obvious that the second stage cannot be possible without the first. Most people need to invest in their future in a regular manner as they cannot invest very large amounts of money but can put away a certain basic amount every month. Savings and investment are not something that come naturally to people as neither is it taught as a subject of study in school and nor does our social conditioning encourage savings. However the sooner working professionals understand the need for saving and systematic investment the more secure their future. Retirement ought to be a time untainted by worries of finances and such matters. Systematic investment in annuities can make this possible. An annuity is a contract offered by an insurance company where the person pays a premium or premiums and in return is assured a certain rate of return. Annuities are useful in planning for one's retirement and creating a nest egg for this important phase of life.

Importance of Systematic Investment

Systematic investment is useful for all working professionals due to the following reasons:

It ensures that the investors set aside a certain portion of their income on a regular basis. Without the compulsion of the systematic investment one is always tempted to spend more.
For most people it is easier to invest savings in small amounts in a systematic manner over a period of time, instead of investing in bulk.
Systematic investment planning is one of the most effective and efficient methods of savings and investment.

Systematic Investment for Retirement With Annuities

Annuities can be bought by regular payment of premiums over a course of time and this systematic investment for retirement is an excellent way of saving for one’s retirement. The rate of interest offered on annuities is higher than on CDs or that offered for savings account. Thus by investing a determined amount of money for a regular and long period of time one is able to slowly create a nest egg that will support one’s retirement and help maintain a similar lifestyle as before. There are many different types of annuities such as the fixed annuity and deferred annuity and most of these can be bought with a systematic investment in annuities. Annuities provide income payments from the investment after a certain number of years, closer to one’s retirement age. The fact that tax is deferred on annuities helps the investment compound. Tax is levied on only the gains part of the income that is received and not on a yearly basis as is the case with CDS, etc.

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