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Finance & Accounting
Pages 5 (1255 words)
PERSONAL RETIREMENT PLAN Introduction Most individuals work and earn money in their primes so that at time of retirement they have sufficient funds in their pocket to carry out their daily activities and requirements. Thus, there is one school of thought that suggests that an individual should not spend his or her entire earnings only on current day’s consumption requirements or desire, but should also focus on investment and savings of current income so as to reap its benefits in future when the individual’s earning capacity is likely to decline with time in future (IOWA State University, 2013, pp.2-5).
The personal retirement planning is a disciplined and step-by step procedure that ensures a secured future retirement life. Problem Formulation and Determination of Objectives The first step in planning personal retirement is to determine the current and future objectives. For instance, among many options that are available, the most preferable option is the growth in income. On the contrary, others might consider the safety of principal investment and they prefer investment in less risky assets. Sometimes situations might require fixed periodical earnings. There is another option left for personal retirement and that is adapted by many smart individuals who prefer to invest in a basket of securities in order to diversify investment rather than concentrating the entire investable fund in single option (Goetzmann & Kumar, 2008, pp.1-10). Some individuals with higher risk appetite might also prefer investment in relatively risky securities in order to earn higher returns in future (Statman, 2004, pp.50-51). ...
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