How trading can help build your investments for retirement
“Retirement is a key topic for me, as my Dad and Sister both died without retiring. They said they were going to, but it didn’t happen. Not me and my wife, Selena. We retired in our early/mid 50’s. We just made it happen. With that, I want to help others do the same. Retirement should come at a Dollar Figure, not an Age. With that, here’s thoughts on how to help you get to that ‘Magic Number.’ Shin”
Retirement probably seems like a million years away for many of you. Yet, it comes around a lot sooner than you think. Planning now can make early retirement much more realistic too.
The millennials among you might be focused on saving up for a home deposit, or paying off student debt. All of which is great. But you also need to be thinking further down the line. People are living longer than ever, meaning your future exists 60 to 80 years from now. If you want to maintain the lifestyle you enjoy today, trading might be the answer to your dreams.
Try online trading
There are many platforms online where you can set up an account and begin trading. A good way to start could perhaps be to save between 12 and 20 per cent of your income over a couple of months and use that money to try trading. Beginners should start by putting in just a small amount of money, since there are risks attached. Many platforms these days also offer demo trading accounts. These are a good way to try your hand at trading before you put in real money. Some of things people like to watch out for as to help guide their next year of trading is the non-farm payrolls.
CFD trading
Contract for difference (CFD) trading is a popular short-term option. It allows you to trade on margin. By investing only a percentage of the amount needed to open a position, you can trade on asset classes like forex pairs, commodities and shares. Leveraged, or margined trading, is great when market prices move in your favour. Leverage can be a double-edged sword, however, and you could end up losing more than your initial investment if prices move against you. So do your research well before you start investing.
When you trade CFDs, you take a position based on whether you think the value of an instrument will go up or down. With CFDs, you don’t buy the underlying financial instrument. Rather, you speculate based on whether you expect prices to rise or fall and take a position accordingly.
One example of a financial instrument is a currency pair, like GBP/USD. In this scenario, you would trade based on whether you think the value of one currency will go up or down against another. The markets can be volatile, so you need a risk management strategy to minimise any losses. CFD trading tends to be used for short-term gains over a few days or weeks. Consider this method as a way to make potential profits that you can later invest for retirement.
Your broader investment strategy might include a retirement income fund. This mutual fund is useful as it will distribute your cash among a diverse portfolio of stocks and bonds. Diversifying is important. Other alternatives include investments in annuities and bonds.
Position and swing trading
More of a long-term strategy, position trading is not influenced by day-to-day price fluctuations or news headlines. Traders using this mode look at the overarching trends of the market to identify a primary trend. Generally their analyses span long time periods, for example several months. This style of trading is actually closer to investing. It could be considered as part of your retirement savings plan.
Swing trading is similar, but spans a much shorter period.
Any Takeways?
Profits can be made with online trading. However, so can losses. Short-term trading modes, such as CFDs, are better suited to those who are looking to speculate on short time price movements in the markets. Meanwhile, longer-term strategies like position trading can be considered more as a retirement investment in themselves.
Trading should never be used as a standalone retirement option. It can be useful for building up your investments and savings.
