Practical Financial Tips

One of the milestones in an individual’s life is retirement. Retirement is that period in life when an individual can look forward to being on their own schedule, doing what they want and not having to work or work as much as they did during their pre-retirement years.

However, being able to enjoy retirement is contingent upon a number of factors. One of those critical factors is to make sure that one has planned ahead and saved the financial resources needed to enjoy their retirement.

In addition, it is important to make sure that one’s money still works even though an individual has stopped working. Therefore, it is important to understand some of the retirement income investment options available that a retiree can utilize to make sure that their money keeps pace with their needs and inflation.

In particular there are two types of modest investments that can accomplish this goal. Those investments include certificate of deposits and money markets.

Certificates Of Deposit

One of the retirement income investment options that an individual has to ensure that their money that is received from retirement sources continues to work for them is by investing in certificates of deposit. Basically, a certificate of deposit is an option provided by various financial institutions.

These certificates of deposit or CDs are purchased by the investor and for the dollars invested are given a set interest rate when the CDs have matured. Often these CDs can mature in increments of three, six, nine, 12, two and five year increments. As long as the investor does not ask for their investment prematurely they are guaranteed the full interest return on the amount of money that they have invested in a certificate of deposit. In addition, the longer period of time that the money is committed to the investment the greater the return on that investment.

The downside to purchasing certificates of deposit is that the money must be kept with a financial institution over the agreed period of time. If the investor draws out their money earlier than the time agreed upon there may be an incurred penalty

Money Markets

Another option that an individual may have that provides a little bit more flexibility in accessing one’s retirement income investment is through a vehicle known as a money market. The money market is like the checking account in which money can be spent utilizing a check or using a debit card. However, there are restrictions in regards to the number of times these types of transactions can be accomplished. In addition, in order to open up a money market, often financial institutions require a minimum amount of money that it takes to open a money market.

The positive component to this type of retirement income investment is that the money earns an interest rate which is generally greater than simply putting the retirement income investment into a savings account.