What are investment funds for retirees?
After the end of the long years of work, and the cessation of the usual financial salaries and bonuses during the period of career service, many retirees find a desire to achieve a new income, which ensures the provision of an acceptable level of investment that grows with their savings or compensation collected for their years of work. This is what investment funds provide for retirees, through their suitable business model for the needs of this type of investors, in ensuring the provision of a stable and stable source of income for them.
By participating in a pension fund, a retired investor can provide an additional source of income when they retire, ensuring that the income from the investment is sufficient to meet their financial needs.
These funds differ from other investments in that they focus on providing sustainable returns while preserving capital and avoiding financial fluctuations that may affect the expected income of this category of investors.
How do Retirement Investment Funds Work?
Pensioners' investment funds or what is also known in Turkey as (private pension investment funds) work by the same mechanism as other investment funds, by collecting funds from a group of individual investors (retirees or other similar groups), and then placing these funds in some investment projects that guarantee stable income, so that their profits are distributed to investors periodically, or their shares are added to the capital to grow it.
These funds are usually managed by specialized experts, adhering to strategies that preserve the capital from losses and acceptable levels of risk.
Types of investment funds suitable for retirees
Retiree-friendly mutual funds have a wide range of profitable investment options, for example:
High-income Equity Funds
These funds focus on investing in stocks of companies with stable earnings, which usually offer large and stable dividends.
These funds are suitable for retirees who want a stable income, with the potential for capital growth.
Bond funds
These funds typically invest in government bonds or strong corporate bonds, and their earnings depend on the interest rates against the lending they offer, which can provide stable financial returns with some potential risk.
Balanced Investment Funds
Also known as hybrid funds, which combine stocks, real estate, and other assets, some of these funds offer stable returns and steady dividends, with an acceptable level of risk due to good asset diversification.
Personal Pension Funds
Personal retirement funds provide investment plans designed to suit retirees, allowing them to invest their money and receive a stable monthly income upon retirement.
These pension funds may be subsidized by the government, or by some companies with stable investment plans that guarantee a stable source of income for this category of investors.
The advantages of investment funds for retirees in Turkey
The idea of private pension systems around the world (including investment funds for retirees) began in the 1980s to complement or replace social security systems. While these funds allow individuals to earn additional income, they can also reach high levels of well-being during their retirement periods, by transferring retirees' savings to private pension investment funds that can grow and make good profits.
Faced with the challenges of retirement and the cessation of income sources for this segment of society, it is important to consider a new source of income to achieve many necessary and urgent benefits, including:
Secure a stable income
Providing a new financial source with continuous and stable profitable returns, ensures that retirees' needs are met without compromising their financial savings.
Capital preservation
To preserve the capital, it is necessary to think about growing and investing it away from potential and expected risks, through investments that take into account the fears of loss and avoid its pitfalls.
Capitalizing on economic growth
Retirement Investment Funds (RIFs) help this group of investors capitalize on economic growth opportunities in the markets, through which retirees can realize long-term capital gains on top of their savings.
Challenges and risks associated with investment funds for retirees
Naturally, pension investment funds vary among themselves, as Turkish funds of this type have recorded varied performance in terms of risk and performance, and for this purpose, the FIGARCH-CHUNG model was adopted to assess the risk of private pension investment funds (a statistical model used in analyzing financial time series to measure volatility and identify periods of high volatility in the markets), and based on this model, the best or worst performing funds can be identified.
One of the main challenges that these funds face in their investments:
- Sharp fluctuations in the financial markets, may lead to a decline in the value of assets with negative effects on the returns that retirees expect to receive, especially in funds that rely on stocks and even bonds.
- Inflation is a serious specter that can erode the value of financial returns as purchasing power declines, so those who continue to invest in inflationary markets are advised to choose investment funds that provide returns that exceed current inflation rates, to ensure the preservation of their savings and profits.
- In private bond funds, investors face high credit risk if they rely on bonds belonging to financially troubled companies, which could lead to a loss of capital if those companies declare bankruptcy.
- In some fund investments, the process of withdrawing from the fund and monetizing the capital requires time, due to the nature of the investments made by the fund.
Perhaps the biggest challenge is choosing a successful fund to manage, as successful performance is related to the high experience of the fund's management team and its ability to grow investments and achieve the desired income, so it is necessary to get to know the fund's management team and make sure they have sufficient experience while reviewing the fund's performance in the past periods to try to understand its ability to achieve the desired results.
Maximize the return on investment funds in Turkey with Oragon's experts
Oragon has emerged in the field of ambitious investment funds in Turkey, as one of the most active companies licensed by the Securities Commission to open and manage various investment funds.
With the launch of its ambitious investment funds and its high performance, especially in the field of real estate funds and the establishment of investment funds in general, Oragon has been able to present itself as a successful investment option capable of growing and providing many achievements.
With the safe and ambitious investment opportunities provided by Oragon through its managed investment funds, which are supervised by a group of investment experts in the Turkish community, those interested will have real opportunities to choose the best investments and achieve their investment ambitions by taking advantage of our advanced strategies, through the transparency we provide to our clients, and clearly defined investment plans.
Edited by Oragon Company ©
