FINANCIAL LITERACY FOR ALL-RETIREMENT PLAN

FINANCIAL LITERACY FOR ALL-RETIREMENT PLAN

As mortal human beings, one day we will get energetically worn out and cannot perform our duties as when we were young. When we are strong and working hard we should know very well that one day whether we like it or not we would get retired to go home and rest, because our productivity would have been reducing and our employers or we would be punishing ourselves if we continue to work under such old-age situations.

Retirement is a must, so we must plan for it. It is heralding and we should not retire like we never worked or work like we would never retire.

There are various retirement plans and many of them can only be achieved when there is discipline and strict adherence to the plan that one has chosen. There are different ways to retire, some retire secured, some retire comfortable and some retire free. Each of these is different from the other so their rewards are also different. If you are working in Ghana, you and your employer would be contributing 5.5% and 13% respectively. 13.5% would be paid to the Social Security and National Insurance Trust, SSNIT and the remaining 5% invested in a private company for better management. This is defined contribution but you the employee could also make your personal, individual, voluntary contributions to any recognized investment management company towards your retirement.

Now, do you think your meager monthly contributions would be enough for you when you go on retirement? Find out how much the pensioners have been taking at the end of the month, you would be marvelled, it is insulting and insufficient.

You retire secured when you rely solely on your 18.5% monthly contributions that you contributed when you were in active service. When you retire secured it is only good but not better.

You retire comfortable when you make additional personal, individual contributions monthly. Here you already have your 18.5% plus your personal contributions. So you retire comfortably. Retiring comfortable is only better but it is not the best.

You retire free when you turned your earned income and your personal monthly contributions into portfolio income and or passive income. Do not just contribute and let the money be sitting with the investment managers, take it and invest in a better venture to earn you more money. Explore the investment market. You need to become financially literate.

Portfolio income is income got from commercial papers and passive income is income got from real estate. So when you are working and get paid at the end of every month, you devote a percentage (%) to invest in commercial papers, say, mutual funds, treasury bills, shares, etc and or in buying of pieces of land, houses, hotels, hospitals, etc. These would be businesses that would generate higher income for you whether you are still working or on retirement.

To retire free means to have a business that generates income for you all the time. A business is anything that gives you income without you presence. For instance you buy a Databank M-fund or Ark Fund or EPACK or HFC Equity Fund, Gold Fund from Gold Coast Securities, shares from the Stock Exchange Market or Treasury bills from Bank of Ghana, your money would be working for you and it does not need you where it is before it can give you the income.

To retire free means you already have your statutory 18.5% monthly contributions, you have your personal monthly contributions and now you have your business or investment all waiting for you. You can now retire free. This is the best retirement plan and you retire freely and financially independent. You would have known you would retire and you would have retired knowing you were working.

Let’s all crave to retire free. Freedom has no equals.

© 2010, Godwin-Xavier Ayeebo

gayeebo@gmail.com