Life expectancy is increasing globally, so people need to receive a retirement for more years. At the same time, the birth rate has been decreasing significantly, which means that in the future fewer people in work will be able to finance the assets of the elderly.
This is added to the fact that for years the salary of a retiree is barely enough to cover basic expenses and is that between high inflation, repeated economic crises, the accounts never close.
Given this reality, with very little prospect of improvement in the future, the option of foreseeing and planning in advance the moment of retirement to reach this stage of life with financial stability seems to be the most appropriate. How to do it?
Between high inflation, repeated economic crises and low wages, retirees' accounts never close. Photo: Shutterstock.
How to ensure retirement without depending on the pension system?
As a first step, it will be necessary to organize the finances of the present and make a long-term plan, appropriate to the possibilities of each one. In this sense, it will be necessary to put together a budget to analyze how much of the monthly income can be used for savings.
Once the finances are organized, you should allocate between 10% and 15% of the money that enters the retirement fund and choose from the options offered by the market.
The sooner it is done, the better. The more time a person saves, the less effort he has to make to have a higher capital. This is because the money is capitalized (interest is added) for longer.
Experts advise allocating between 10% and 15% of the money that enters the retirement fund. Photo: Archive.
Investing for retirement retirement: what are the options offered by the market?
A) Funded life insurance
One of the instruments to help achieve this objective is funded life insurance. These are very flexible mixed products that adapt to the needs of each person and can even be adapted over time according to the personal situation.
How do they work? It is sold by insurers and to pay for it, a monthly amount is deducted from the client's bank account. They have two components, on the one hand, they offer life coverage against any risk and, on the other, they allow you to invest part of the monthly contribution (premiums), in an individual account that generates a profit.
The options are varied. In addition to basic life coverage, additional coverages can be purchased. For example, insurance and advances for serious illness or hospitalization. Some characteristics of capitalization insurance are:
The degree of liquidity to make partial withdrawals is different, according to each policy.
- The contract can be signed for a fixed term or it could be "full-life".
The policy may continue or terminate at any time. It is independent of the most productive life stage and there is no obligation to withdraw funds.
- The insured designates a beneficiary, who receives everything without any tax deduction.
How much do you have to pay per month? The amount of each contribution will depend on the person's age, financial ability, and coverage needs.
The contributions, the requested coverage and the accumulated balances of the individual account are at the official exchange rate of the National Bank. That is, both monthly or extraordinary contributions and total or partial redemptions are in pesos linked to the official dollar at all times.
The youngest, up to 39 years old, have options from $ 26,180 per month (in reference value to the official dollar, u $ s 110) approximately, and the elderly, from 40 years old, contribute a slightly higher amount, which is around $ 35,700 (u $ s 150), but always depending on the term and personal objectives of each one.
What is the tax benefit? Long-term savings are not widespread in Argentina but, as of 2019, there was a tax change that encourages people to raise money for retirement.
In this way, the monthly premiums or contributions of natural or legal persons can be deducted from the Income Tax up to the maximum annual allowed, which will be updated according to a unit of measurement that follows the collection (Tax Value Unit).
One of the instruments that help save for retirement is life insurance with capitalization. Photo: Archive.
B) Investments in the Stock Exchange
Another option, particularly for those who do not have the possibility of contributing a fixed amount of money every month to a capitalization fund, is to invest a certain amount of money in a financial instrument.
For those who have little or no experience in the Stock Exchange it can be very intimidating, because most assume that you must have a lot of money and knowledge about the market, but nothing further than that.
It is enough to be prudent and inform yourself about the subject to take advantage of this alternative with which you can obtain future profits also preventing the money saved from being devalued.
Currently one of the most recommended instruments to escape local risk, both exchange and macroeconomic, is the Cedear, whose attraction lies in the fact that you can invest in pesos in world-class companies that have been registering significant increases in their prices and that show growth potential. In addition, it is protected by the dollar.
Some of those companies are Apple, Google, Facebook, Microsoft and Amazon, among many others. But also, like any financial asset, these instruments have advantages and disadvantages, so it is essential to understand how they work.
What is a Cedears? Argentine Certificates of Deposit, known as Cedears, are papers or securities that follow quotes of foreign companies in global markets. It is accessed in pesos, some also in dollars, but the fluctuations of the dollar follow Contado con Liquidación (CCL).
The costs are the same as for trading stocks in the local market and you do not need an offshore account.
"For those who have a surplus in pesos and do not need to dispose of them in the short term, what is being recommended today is to invest them through Cedears," Nicolás Lo Valvo, an analyst at Balanz, told Clarín.
"It is an ideal and very accessible alternative for those clients who wish to avoid local risk by positioning themselves in international companies within a wide universe of alternatives that are gaining more and more trading volume," he added.
To invest in the stock market it is enough to be prudent and inform yourself to take advantage of this option and obtain future profits. Photos: Diego Waldmann.
Step by step, how to invest in Cedears? It can be purchased from a unit of Cedear onwards and the minimum amount will depend on the price of each, it can be from $ 10,000 to obtain better yields
It is a very simple operation, which is done online as follows:
1. Choose an ALYC agent (Settlement and clearing agent), or better known as a broker or financial agency.
To gain security, it can be verified that the selected entity is authorized by the National Securities Commission (CNV) and that it appears with a registration number on its website.
2. Open an Investment Account. This management is quick and simple and is done through the website of the agency with which you have chosen to operate.
A selfie of the face, a photo of the front and another of the back of the ID and some personal data will be requested. It is 100% online, with no opening or maintenance costs.
3. Deposit money to the investment account through a transfer of pesos from a bank account, in which you are the holder, to the account listed on the page of the financial agency. Once the money is credited, you can start trading.
4. From the broker's website or mobile application, you must look for the section where the Cedears appear and select the company in which you want to invest. Generally, brokers expose the evolution of each one, which helps to know their recent performance.
Regardless of the option you choose to save for, it is important to always inform yourself with trusted financial advisors to choose the best instrument to protect that savings from inflation and devaluation.
LN
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