Most people would say that money can’t buy happiness, but when it comes to retiring happily, money is crucial. Poor financial health makes you a burden on someone else’s shoulders and robs you of the chance to have the sort of retirement you always dreamed about. Making smart investments while you can is a vital part of accumulating a comfortable pension pot. And it doesn’t have to be a struggle if you explore all the options available to you.
Your financial freedom rests on your ability to make smart decisions when it comes to managing money. With the savings interest rates in the gutter, it’s no longer enough to be saving every cent. It’s time to make those cents venture out and multiply.
Learn from the mistakes of struggling pensioners
Age UK, UK’s largest charity working with older people, says pensioner poverty is still a huge problem. Nearly three million over-65s is facing financial problems and would be unable to meet an unexpected expense, while more than half a million can’t afford to keep their homes warm.
Many young people don’t realize is that switching from salary to any pensions that you’re entitled to almost always means a drastic drop in income and you definitely will be unprepared to swap work income for the pension.
The sad reality is pushing us to think about ways how to pump up our pension pot. If you don’t make time for thinking your options through now, you may end up scrambling for ideas when it’s a little too late.
What is the magic amount you need to retire happy?
Financial planner Wes Moss conducted a survey of 1,350 retirees in an effort to find out what the magic amount of money needed to retire happily stands at. He wasn’t just trying to get a number, though. Moss aimed to understand how money correlates to retirees’ levels of happiness: what they do in their free time, where they shop, what cars they drive, how often they travel, and so on. His research uncovered that the ideal amount needed to have a happy retirement is roughly €425,000.
However, while this is a slight indication of what you should be aiming for, it is by no means the magic amount for you. Only you can know how much money you need to accumulate to lead a comfortable life as a pensioner. Having that number in mind will also help you to assess and, if required, adjust your retirement plan to stay on track throughout the years. For those who think their pension pot could use a healthy boost, here are some ways to establish streams of passive income.
Passive income streams
Let’s begin by defining what passive income means. Passive income is about creating or purchasing something that will continue generating money long after the initial action. Sometimes, passive income can refer to creating value for others - like writing a book or crafting an online course. And sometimes, it is used to describe steady returns on a past investment - like loaning money to people through P2P platforms or buying a rental property.
Regular income without having to move a finger is every investor's dream. In the past, having a stable portfolio with a steady income stream used to be difficult. However, these days, with fintech revolution paving the way for new, safer and more profitable investment alternatives, everyone can choose to employ their money to make more money.
Assuming you have idle cash in your bank account, investing in P2P loans could be just the right thing for you. P2P lending is a viable alternative to traditional bank loans. Peer-to-peer platforms connect those who want to borrow with people like you, who want to make their money work a little harder for them. It’s a much faster and less bureaucratic process than what we’re used to with the standard bank loans and it, of course, offers a handful of other benefits.
The most important benefit of P2P lending for investors is the opportunity to earn notably higher interest than any savings account could yield. At FAST INVEST, the returns on consumer loans are typically 9% to 16%. By comparison, a five-year fixed ISA can only generate around 2%.
Many entrepreneurs and self-made millionaires offer the same nugget of wisdom - build a range of different passive income streams that will cover your day-to-day expenses while you work towards achieving your financial freedom. A passive income stream means it requires little or no maintenance to keep the money growing and making more money. Using P2P lending to earn a passive income is easy: pick a few suitable loans, establish a diversified investment portfolio, define investment rules, set it on automatic and watch your money get to work.
P2P Alternative Investments is one of the best methods to build up a passive income stream. Currently, at FAST INVEST, investors earn 9% to 16% returns and have access to the Auto Invest tool that can continue reinvesting on their behalf. You can use P2P lending to improve your retirement income by reinvesting all the interest you earn on the principal sum. Over the years, it will accumulate to an impressive amount and can become your steady stream of income.
But are consumer loans really a good investment choice? We think so, and here are a few reasons why:
- You don’t need much knowledge or capital to begin investing. Investing can often be intimidating because of the amount of knowledge and capital that you need to begin with. For example, if you want to start investing in real estate, you need to understand the laws, the financing, and the area. Then, you need to spend hours upon hours at the bank, in order to get a mortgage. And, of course, you need to cough up tens of thousands of dollars for the downpayment. All that just to get your feet in the door! Investing in consumer loans is much simpler and much more accessible. For example, with FAST INVEST, an application process lasts less than an hour and you can start with as little as €1. Moreover, if you don’t feel knowledgeable enough, you can always turn to our Auto Invest tool that will do all the work for you. Who could have thought investing could be so easy?
- When you invest with trusted companies, the risk is low. People often associate investing with high risk and it’s not for no reason. The stock market is notorious for its volatility. Real estate goes through boom and bust cycles. Startup investing is basically gambling. Those with high-risk tolerance tend to thrive in investing, but do you have to be an adrenaline junkie to be a successful investor? Investing in consumer loans isn’t risky as long as you diversify your investments. What does that mean? It means that instead of putting all your money into one loan, you spread it out over several loans. That way, a single default won’t affect you much, because you’d only lose a few euros as opposed to your entire investment. Moreover, with FAST INVEST, you wouldn’t even lose those few euros. We offer our investors a BuyBack Guarantee. If a borrower is late with their repayment for 3 days, FAST INVEST obligated to cover the late payment. That means that even in a case of default you’d get your money back. There’s really very little risk when you are investing with us!
- Investing in consumer loans with the right company offers great flexibility. When you are really rich, you can put large amounts of capital into illiquid investments, and then not think about it again. But what ordinary person can afford to do the same? Almost no one. The reality is that an average investor needs liquidity, but that’s not so easy to find. Whether you put your money in an investment fund, real estate, or startups, it becomes inaccessible to you for a certain period of time, often for years. That is actually true for most peer-to-peer investment platforms as well. A lot of them have so-called secondary markets where you can try and sell your investment if you want to get your money back. But that is uncertain and time-consuming. Not very appealing when you are in need of money. But here at FAST INVEST, we understand that things happen. You can get fired, you can get sick, your car can break down. Everyone encounters a financial emergency at some point in their lives. That’s why we offer our MoneyBack Guarantee. FAST INVEST is obligated to buy back your investment within 1 day, which effectively allows you to withdraw your money at any point. Again, with us, there’s a very little risk!
So is it really wise to rely on your salary to be your one and only income stream? Think about it. It might all seem good now - you might have a job you love, friendly colleagues, and a great boss. But what does the future hold? You never know. That’s why it’s important to have a plan B in case you get fired or get sick and can’t work anymore. And even if you are fortunate to not get fired or get sick, you are going to get old, and you will eventually have to retire. Are you ready for it?
Most of the new pensioners are not financially equipped to stop working and are struggling to make ends meet. It’s likely that when you’ll retire you’ll face an income drop of up to 50%. Taking a strategic approach to plan for retirement and expanding wealth by adding new investment products to the mix is what will eventually save the future pensioners from money worries. If you haven’t made your calculations yet, it’s about time! Investing in consumer loans provides a great way to gradually build up a reliable income stream that can complement your salary or your pension. Start investing now. It’s better to be safe than sorry!