One of the biggest reasons people are so interested in investing is that they want a sound, secure way to pay for their retirement. Everyone from new university graduates to people transitioning into retirement needs to get as ready as possible.
I was talking to my son's friend, who is 23, about starting investing. I showed him how it was possible to have a portfolio value of over $1 million by investing manageable amounts of money over the next 30 years.
Interestingly, he wondered what a million would buy in 30 years and how long it would last.
Most people don't know how much they will need to retire on. Many others don't have a plan to achieve their retirement goals, either. They figure they have super, yet some studies have shown the current 9.5% guaranteed contribution may not be enough to meet your retirement needs.
You need to supplement it with either more salary sacrifices, more voluntary contributions, or have separate investing plans outside of super.
Use these three steps to get better prepared
1) Take advantage of all the tax benefits from superannuation to maximise your final totals.
2) Find a super plan with a direct investment option to buy ASX 200 stocks through your super. It's easier than a self-managed super fund and you can do your investing online. You can still have control over what you invest in.
3) Begin investing with safe, solid companies that could last as long as you will. For a start, I would suggest Insurance Australia Group Limited (ASX: IAG) and Telstra Corporation Ltd (ASX: TLS).
Insurance Australia Group
This is the market leader in general insurance and insurance businesses can generate good returns over the long term. It works through such brands as NRMA Insurance, CGU and SGIO. Industry conditions are improving currently with less large natural disasters to pay claims on. It offers a big 5.8% fully franked dividend yield.
Telstra Corporation
The $67 billion telecom giant is a favourite among investors because it has a very stable dividend that now has a very healthy 5.2% yield fully franked. That's better than many bank term deposit interest rates. As the leading broadband and mobile service provider, it has the large scale to survive and thrive for a long time. It will earn even more when the national broadband network is implemented through the company's existing physical phone cable system.
