For anyone concerned about their financial security in the future, they have to be serious about their future financial planning, especially after retirement. Financial planning is the first step to ensuring that the lifestyle one dreams of in the future or at retirement will have a better chance of becoming a reality. When I think of investing in my future, three ideas immediately come in my mind – real estate, bonds market, and high-interest savings account. One way I am considering to invest in my future is through real estate. Real estate investment is the buying of a future income stream from property ( Eldred) . I believe that investing in real estate will be a good way of realizing returns on my money. Real estate investment may provide various benefits over other forms of investment, including diversification, inflation hedging, stability, and potentially higher returns. Besides, real estate has additional benefits like its ability to both generate cash flows from mortgage interest or rental income, as well as an increase in value.
My second investment option is the bond market. Investors trade in the bond market – sell and buy – debt securities, primarily bonds, which might be issued by companies or governments. The reason I want to invest in the bond market is that it offers investors a steady but nominal source of regular income. In some instances, like treasury bonds that the federal government issues, investors get semi-annual interest payments. Just like many investors do, I will choose to hold bonds in my portfolio as a means of saving for retirement, for my children's education and other long-term needs ( Galliani et al.) Although most investments offer some sort of income, bonds tend to provide the most reliable and highest cash streams. Most importantly, a diversified bond portfolio may offer decent yields which have a lower volatility level compared to equities, and with a greater income compared to money market funds or bank instruments. Thus, because I want to live off my investment income during my retirement years, I believe bonds are a good investment option for me. The third way I am considering investing in my future is through a high-interest savings account ( Atalay 88) . This is one of the more risk-free options because I will be guaranteed to see my money grow by the time I come to withdraw it. There are multiple different types of accounts to invest in, so I will need to choose the one that best suits me.
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Of the three investment options, the one I feel I am most confident through which to invest in my future is real estate. I am 100% confident I will invest in commercial real estate because I will be able to get equity appreciation over time along with monthly cash flow as rents. Besides, real estate gets some good tax breaks, with one of them being depreciation deduction. Tax deduction on properties is one of my major drives to this industry ( Eldred) . Further, the rental property will even be able to generate high rents during inflation. Higher materials and labor costs overall translate into high costs of housing and therefore higher rents.
However, the investment option I perceive to be challenging will be a high-interest savings account. There are various challenges to this option. One, savings accounts come with variable interest rates. If the Federal Reserve resolves to reduce interest rates, I would be receiving less interest compared to when I invested in bonds or real estate. Another challenge is the restrictions on cash withdrawals, which makes it difficult to withdraw money in cases of emergency ( Atalay 103) . To address this, I will look for the banks with the best and fixed interest rates and save with them, as well as open another savings account which can allow me to withdraw money anytime I want.
Works Cited
Atalay, Kadir, et al. "Savings and prize-linked savings accounts." Journal of Economic Behavior & Organization 107 (2014): 86-106.
Eldred, Gary W. Investing in real estate . John Wiley & Sons, 2012.
Galliani, Clara, et al. "The liquidity of corporate and government bonds: drivers and sensitivity to different market conditions." Joint Research Centre Techinical Reports of the European Commision. https://doi. org/10.2788/70146 (2014).
