From a savings account to micro-investments: How to smartly secure a fairytale retirement

The idea of a comfortable old age without financial worries is the dream of many people. Saving for retirement is not just a choice, but in today's world also a necessity for securing a stable standard of living after leaving the labour market. In this article we will look at various strategies for saving for retirement and how a modern approach to investing can give you a secure financial foundation.

Saving for retirement: Why, how and where

The sooner you start saving for retirement, the better

Saving for retirement early is the key to financial independence and a stress-free old age. And if, on top of that, you go about it smartly and spread your investments across various financial products, you can live in retirement in a way you never even dreamed of.

Many people still rely solely on state pension systems. With each passing year, however, it is clearer that this is not enough. They often may not cover all of your living costs.

The reasons to start saving early and to diversify investments include:

• protection against inflation and the risks associated with changing economic conditions;
• reducing financial stress;
• flexibility in retirement planning (if you start saving early, you can afford to retire sooner or enjoy a higher standard of living in later years).

Reading tip: Are you a complete newcomer to the world of investing? Read our article where we answered all the questions about investing.

How to best save for retirement?

• Start early and send money regularly.
• Beyond that, setting specific goals for how much to save for retirement can then help you reach the financial reserve you need.
• We also recommend spreading your investments, or rather diversifying your portfolio. You will thereby help minimise risk and maximise returns. At the same time, you have flexibility in choosing your funds.

Where to save for retirement?

Traditional saving options, such as savings accounts and pension funds, offer certainty, but modern investment instruments can offer higher returns. We are talking, for example, about micro-investments in real estate or a long-term investment product (DIP). Each of these options has its advantages and disadvantages, but the best retirement savings is the right combination of them.

• Savings accounts are a safe and liquid choice for ordinary money storage, because they offer immediate access to funds without the risk of capital loss. The advantage is low risk and deposit insurance. The disadvantage is the very low interest rates, which often do not even cover inflation, which means a loss of the real value of money – and it is precisely for this reason that savings accounts are suitable rather for short-term savings than for long-term provision for retirement.
• Pension funds are intended specifically for provision for retirement and often offer state contributions or tax relief. The advantage is that they provide long-term stability and help build up larger capital thanks to a combination of your own deposits and contributions from the state or employer. The disadvantage can be limited flexibility when it comes to withdrawing funds, and potentially lower returns with conservative strategies.
• Long-term investment products (DIP) combine various types of investments (e.g. stocks, bonds) and are intended for the long-term appreciation of capital, the advantage being the potential for high returns thanks to market growth.
  There are several advantages – thanks to it, you can deduct up to CZK 48,000 from your tax base each year, and your employer can contribute to it. You can, however, terminate it no earlier than at the age of 60 after a minimum of 10 years of investing. The withdrawal is then not subject to taxation. Among the disadvantages is the fact that if you do want to pay the money out earlier, you will have to repay up to ten years' worth of your past deductions and employer contributions.
• Micro-investments in real estate allow investors to enter the real estate market with small amounts, which opens up the possibility of portfolio diversification and potential rental income. The advantage is that real estate investments usually offer stable growth and protection against inflation. The disadvantage can be limited liquidity and a longer time horizon before the investment brings a profit, and dependence on developments in the real estate market, which, however, in the context of saving for retirement need not be a hindrance to you.

Why choose micro-investments in real estate as part of saving for retirement

• You can start investing small amounts, from as little as CZK 2,500. And even with this minimum you have access to the most luxurious resorts in our offer.
• Compared with buying a property, with this form of investment you have zero worries.
• It brings stable rental income as well as a share from the sale of the property.
• Any fees at InvestBay are transparent and precisely defined. You are always in the picture.
• With us, every investor has the option to vote, and thereby to a certain extent take part in the development.
• You have no worries with the property. Read about how we at InvestBay approach this in the interview with Andrew Thompson.
• You can travel to the resorts on holidays at a discount.
• You have access even to the most luxurious resorts in our offer, whether you want to invest the minimum – that is, CZK 2,500, 10,000 or 200,000. Find out how it works with us.

How to save for retirement with InvestBay micro-investments step by step

1. Register on our website. It will take you ~3 minutes.
2. Fill in the investment questionnaire.
3. Take a look at our investment properties that you can invest in immediately. We provide truly detailed information: you always know the estimated annual appreciation as well as the investment length, plus plenty of other information and photographs. After registering, you gain access to financial documents and detailed information.
   
   Tip: Calculate the return on investment, the appreciation and the yields on our investment calculator.
   
4. Have you chosen which property (one or several) you will invest in? Great, but first we will verify your identity (if you are investing with us for the first time). All you need for this is 2 identity documents, a mobile phone and 5 minutes of your time.
5. Decide for yourself how much you want to invest and whether it will be a one-off investment or a repeated one. The choice is entirely up to you. The minimum value of a single investment is CZK 2,500 (EUR 100). If you are afraid or new to the world of investing, such a micro-investment will allow you to understand the whole platform and later make a more informed decision, if you want to. But we are sure that you will soon decide to invest more.
6. You place an order and securely transfer the money to the account. Done!
7. Once the entire amount is raised, we buy the property and transfer it to InvestBay in the land register.
8. At the end, you receive a share from the sale of the property and along the way also money from the rental of this property. How do we pay out money?

Do you have a clearer picture of the topic? If not, explore our blog and dive into more articles from the world of finance that we write for you.