I. Retirement Starts Early if You Desire to Retire With Money
Perhaps it is looking toward the future in terms of insurance, planning for college and other issues such as this also gets your mind moving on how you will be ready when retirement gets here.
But if we were able to step back above our lives, the best time to start preparing for retirement is not the middle age years. Retirement planning experts tell us that if young people in their twenties or even teens can start putting a little bit back toward retirement, the rewards when they reach their golden years will be phenomenal. If a youth in his early twenties or teens were to just put one percent of what they make back, and that money stayed in some form of investment vehicle that would grow into a retirement account, the growth between the time of investment and retirement at 60 or 65 can be explosive even at a modest interest rate.
Unfortunately, few young people are looking that far ahead when they are in their early adult lives. That is a time when the transition from teen years to family life is pretty all consuming. So it might be the responsibility of parents and older advisors to help youth see the value of starting to work on their retirement savings well in advance so they have a well developed program when their retirement years come along.
One of the best places for a young person to start their retirement program is with the 401k or retirement benefits at their job. Now, in the last decade, many businesses have eliminated retirement benefits where the company pays for the retirement. But if the young person works for a company that offers 401K, they can set aside a percentage of their income and it will be put into a retirement fund before taxes. Moreover, often the company will match the funds up to dollar for dollar and the company will manage the investment of the funds as well.
The outcome is a healthy and rapidly growing fund that starts out with an immediate doubling of the invested funds and then grows steadily over the years as more is put into the fund with each paycheck. The young worker gets used to the retirement money coming out so they adjust their budget to live without it. And without giving retirement much more thought than that, within a few decades, the 401K can evolve into a very impressive retirement account to be sure.
If you are a young person and you are considering if you might think about starting a retirement account, congratulations. You are one of just a few people who have the foresight to think about retirement this early in life. And by starting now, you take advantage of the thing that is your greatest asset is time. Because if you only put a little bit back, that can grow and grow and grow and become a sizeable retirement nest egg for you and your spouse even if he or she is the spouse off in your future.
II.What is a Managed Future?
Unlike what it sounds, a managed future is not about a college choice or a personal growth plan. On the world of investment and finance, a managed future is a type of investment choice. Unfortunately, many individuals without a finance background may not understand exactly what this is, so let us take a look at what this choice could mean to you.
Q: What is a Future?
A: A future is basically an agreement between the investor (or buyer) to buy something at a set price sometime in the future.
Q: Is this something new?
A: No. Futures have existed for more than 30 years, but are sometimes considered an alternative investment due to their lack of popularity among the general population.
Q: What is a hedge fund?
A: To understand this, you have to understand there are two main players in the futures market. There is a Speculator and there is a Hedger. The Hedger will enter a contract to purchase or sell an item to guard against price risk. A great example of a Hedger is a farmer who will enter into a contract to purchase seed today, but not for shipment in 6 months. The reason for purchasing seed today is that the farmer believes the future price of seed will increase in the upcoming months.
The speculator is someone who is not intending to minimize risk, but instead wants to profit from the increase in price. The speculator is not someone who intends to take physical possession of the commodity, but is in the market only to make money.
A hedge fund therefore is a fund designed to engage in short selling.
Q: OK - what does short selling mean?
A: There are two ways to buy and sell - either LONG or SHORT. Short buying or selling is focused on commodities that may be over-valued now. For example, the hedger farmer is going to secure a contract to sell his corn at today's prices because he thinks that corn prices are going to drop in the future.
Buying or selling long is focused upon commodities that may be under-valued now. A speculator may purchase gold contracts today because he believes that gold prices will increase in the future and will sell at the higher price.
Q: What is a managed fund?
A: A managed fund is one that has a professional full-time administrator of the fund who is responsible for purchasing and selling futures in order to make money. Many managed funds are rather secretive and the strategies used by the administrator can vary as widely as their own personality.
Q: Are they a safe investment?
A: The answer is yes and no. It really depends upon the strategy, knowledge and experience of the administrator.
In conclusion, a managed future fund is the perfect way to introduce diversification to your portfolio. But it is also an investment choice that requires some understanding and trust in the fund purpose and the administrator of the fund. If you are interested in this type of fund, take an afternoon and do a little research to find the one that best meets your needs.
