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A Smart Way to Distribute Money To Your Retirement

Time segmentation is a strategy that can be used to invest in retirement. It involves matching investments to the point where they will have to be withdrawn to meet retirement needs. Let’s look at an example.

Suppose Jan and Wacława are 60 years old. They plan to retire at the age of 65. They want to be sure that their first ten years of retirement income are secured. If they use a time segmentation approach, they may purchase bank deposits, bonds or other secure securities (or a combination of these things) in quantities that will allow them to reach age and will be available in the year in which they need them.

An example of time segmentation in practice

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Let’s assume that Jan and Wacława know that at the age of 65-70 they will have to pay PLN 50,000 a year to cover living costs. They find a number of deposits and bonds generating from 2% to 4% of income, which will expire in the years in which they will need these funds. This is called a ladder strategy. It works as follows:

  • Deposit No. 1 paying 2% – expires at the age of 65 Jan.
  • Deposit No. 2 paying 2.5% – expires at the age of 66 Jan.
  • Bond 1 paying 3% – expires at the age of 67 Jan.
  • Bond 2 paying 3.5% – expires at the age of 68 Jan.
  • Bond 3 paying 3.75% – expires at the age of 69 Jan.
  • ten-year investment with a fixed annual income of 4% – expires at the age of 70 Jan
  • Bond 4 paying 4% – expires at the age of 71 Jan.
  • Bond 5 paying 4.1% – expires at the age of 72 Jan
  • Bond 6 paying 4.15% – expires at the age of 73 Jan.
  • Bond 7 paying 4.2% – expires at the age of 74 Jan

Using the above schedule

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In the sections below I present the required investment needed at the age of 60 Jan. Including the interest he would earn to provide the needed PLN 50,000.

Deposit No. 1 paying 2% PLN 45,286.00
Deposit No. 2 paying 2.5% PLN 43 114.00
Bond 1 paying 3% PLN 40,654.00
Bond 2 paying 3.5% PLN 37,970.00
Bond 3 paying 3.75% PLN 35,888.00
10 years of fixed annual payment of 4% PLN 34,601.00
Bond 4 paying 4% PLN 32,479.00
Bond 5 paying 4.1% PLN 30,871.00
Bond 6 paying 4.15% PLN 29,471.00
Bond 7 paying 4.2% PLN 28 107.00
Total needed: PLN 358 451.00

Let’s assume that Jan and Wacława have a retirement account and other savings and investment accounts with a total value of PLN 600,000. After using part of their savings to cover the above time segments (which corresponds to their first ten years of retirement), they have PLN 242,549. This part of their savings and investments will not be needed for 15 years.

If they invest everything in shares (preferably in the form of stock index funds) assuming a rate of return of 8%, it will increase to PLN 766 234. We call this a growing part of their portfolio. In years where part of the growth is doing well, they would sell part of the stock and extend the time segment. By doing so continuously, they can always count on seven to ten years, being aware that they have safe investments that will allow them to cover their expenses. They have the ability to flexibly profit in good years and give him time to regain good shape in a bad year.


Notes on these calculations

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In these calculations I assume that all interest could be reinvested at the given interest rate, which in reality is often not possible.

I also don’t take inflation into account. In fact, Jan and Wacław would need more than PLN 50,000 in five years to buy the same amount of goods and services they would buy today for PLN 50,000. You can increase the needed PLN 50,000 a year by 3% over the whole period, until necessary. Later, discount them back for the return on investment to be used. You will need to make calculations based on your own inflation needs and assumptions.

If Jan and Wacława add money from the state pension to all this, maybe the required income will not have to be PLN 50,000 a year, only less. They may need the full amount of money sooner and then less when they start using social security.

Benefits of time segmentation

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Using a time-based approach, you don’t have to worry about what the stock market was doing today, or even what it is doing this year. A growing portion of the investment portfolio will not be needed for fifteen years.

Time segmentation is completely different from the traditional approach of systematically withdrawing assets. The traditional approach to allocating funds determines what percentage of funds should be in cash, bonds and shares. The basis of this approach is the annual volatility that you are ready to face. Then configure what is referred to as a systematic withdrawal plan to sell enough assets for each asset class each year (or each month) to meet your retirement needs. With a time approach, the annual variation is not relevant to your goals.

Why do people demonize loans?

If you’ve ever been interested in the subject of loans, then you certainly know the controversial opinions about the non-banking sector. Myths about loans are as common as believing that a black cat crossing the road causes misery. But do we really have anything to fear?

Where do the myths about loans come from?


Common opinions about loan companies are nothing but stereotypes well known to all. Simplified, often repeated opinions, which are not sufficiently substantiated. A stereotype works like a rumor – it spreads quickly and feeds with unreliable information.

It often grows in strength due to scandals appearing in the media. Myths about loans arise in the same way. And despite the fact that stereotypes tend to be both positive and negative – usually the worse ones have more power. After all, it is known for a long time that negative information enjoys tremendous breakthrough power.

So where exactly do the myths about loans come from?

So where exactly do the myths about loans come from?

They often result from three reasons that constantly appear on our blog. These reasons include:

  1. Insufficient verification of the potential lender – each of us is sometimes in a sub-gate situation. Driven by stress and difficult emotions, clients of loan companies do not always check who they borrow money from sufficient distance. Often becoming victims of not entirely reliable companies.
  2. Insufficient familiarization with documents and terms of the contract – The documents and contracts that we sign with loan companies are always extensive, and not always understandable. ALWAYS, but you ALWAYS READ THE DOCUMENTATION FROM BOARD TO BOARD, to protect yourself from the additional costs and spiral of debts. If you do not understand the provisions given in the contract – ask. The loan company is obliged to provide you with explanations about any doubts.
  3. Lack of knowledge about the specifics of the product – A loan is not a loan. It is also not an installment loan. Lack of knowledge about the specifics of these products can seriously damage our pocket. So before you take out a consumer loan – learn more about the rights and obligations of both loan companies and borrowers. We also recommend that you familiarize yourself with the basic information about the Anti-usury Act.

Especially the second point is problematic

Statistics are ruthless, as many as 80 percent of respondents accept the regulations without first reading them. Such nonchalance is a major cause of contractual problems.

Is it worth taking a loan despite the widespread opinion?

With common sense, everything is for people. Loans also often prove to be beneficial. The loan can serve as a support through a given purpose, and not as a temporary source of cash “for nothing”. Keep this detail in mind if you want to avoid problems.

If you need cash “already” and are considering taking out a loan – read more about the benefits of installment loans.

Business start-up loan – for whom? – Business Loan

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A business start-up loan can be helpful for new entrepreneurs. Do you start with business? Do you want to start a business but you lack the money to get started? Learn more about loans for starting a business. Check if this loan is right for you.

Start-up loan: check the risk

Starting a business, setting up a company, starting in business always involves a lot of risk. Therefore, before opening a company, you should always think carefully about every aspect of our business and prepare a proper business plan that should show the assumed costs, income and threats. But as the old Russian proverb says – “Those who don’t take risks don’t drink champagne .

” If we are sure of our decision to open a business, we know that our idea will work, there is nothing else but to register the company in CEIDG. The biggest problem for new entrepreneurs that they have to deal with at the start of their business is the insufficient amount of money to start a solid business. How to deal with this problem?

Development is the basis

Let’s assume that our entire business plan is precisely executed and refined in every inch. Unfortunately, to fully start our business, we still need to buy the right equipment, machines etc. Unfortunately, we do not have sufficient funds to buy the equipment necessary to perform business.

Then what? How can we grow the company, even if it is not difficult for us to start earning, despite the thoughtful strategy and long-term vision? A loan to start a business can be helpful.

Loan for starting a business

When it comes to business loans, there is a double risk. First of all, just starting a business is quite a challenge. Something can always go wrong, especially when we are just taking our first steps in business and we don’t have much experience. Secondly, if our business idea does not work, and we use credit, we will remain in debt later. It is therefore wise to approach the issue of taking out a business loan. However, if you are confident, the next step will be to choose the best offer.

Will the bank give me a loan?

It must be clearly stated that the offer of loans for opening a business is very limited. Only a few banks offer this type of solution. This is not surprising, because financial institutions assess the risk of loan defaults, which is very high for a novice entrepreneur.

However, it is worth knowing that it is not only banks that grant loans. If we do not receive a positive response from the bank, nothing stands in the way of taking advantage of long-term installment loans offered by non-bank institutions.

There are many loan companies operating successfully on the Polish market with a loan offer to a novice entrepreneur. It is worth looking closely at the terms offered by borrowers and comparing several companies. Perhaps this is the solution that will help us grow the company.

About personal finance, loans and money

This is an article on personal finance, loans and money for anyone who might need some financial tips and advice. Let’s start by asking some questions:

Can you manage your personal finances?

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Many Norwegians today do not have as much knowledge in managing their personal finances. A quick advice to do something about this is to start reading newspapers (or online newspapers) about things like real wages, inflation, the dangers of consumer loans and that banks can be a few vultures when it comes to fees…

If you want to be sure no one else can control your finances, knowledge is one of the tools that can help you. We will give you knowledge and advice on personal finance. Knowledge about borrowing money is just one of many things that can help you make some of life’s hard decisions when it comes to money.

Should You Borrow Money?

What should you be aware of when taking out a loan ? How can it best pay for loan money and what type of loan is best? What does it cost to get a loan? What is the interest rate? Can I repay my loan early? Is consumer loan the best solution or should I get another loan in my bank?

Loan money – it’s simple, but not always a good idea. Should You Save Money? Savings – it must be in the bank? In bonds? Or in stocks? What about gold and commodities? Where can I find savings advice and what should I consider? Why am I slowing down the growth of society when I save money?

Savings… it’s not that easy, but it can be a good idea! Are you ready to juggle your money? What does your economy look like in the future with today’s costs?

We can give you many good answers to such questions. We recommend that you enter your e-mail address below for financial advice.

We will try to explain difficult financial concepts to you in a simple and easy way so that everyone can understand them. We write about news about your personal finances. We develop tools to help you manage your daily finances. We try to be honest, so you know what’s up and down on various financial products.

Personal finances and borrowing money can be easy

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We want to help you figure out what is “best” for your personal finances. Maybe it’s best to save money for a while or maybe just slow down on consumption?

Just as you can feel on an engine in a car when it is ready to change to a higher gear, you can learn to make sense when your personal finances are ready for a higher gear and a little more speed. Conversely, you can also learn to make sense when there are sharp turns in the financial path, which requires quick action on your part. You can learn to understand the economy here today.

How to save money in your home budget?

Saving money and planning your home budget is a difficult habit. This applies especially to young people for whom postponing for retirement seems to be a very distant prospect. Meanwhile, in saving more important than how much money we will accumulate in a given month is to consistently stick to the established financial plan and systematically save even small amounts.

Poles have more and more savings

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According to data collected by the National Bank of Poland, Poles are getting better at saving and planning their household budgets. We have set aside PLN 2 trillion, i.e. PLN 114 billion more than a year ago.

The stock exchange had a significant impact on the amount of savings owned by the respondents – as many as 47 of the 114 billion mentioned above came from the increase in the value of shares and units of investment funds. Does this mean that we willingly turn over our capital? Unfortunately, not entirely: 9% of the funds are cash, and over 22% of them are on interest-free bank accounts. In total, it gives as much as PLN 631 billion, which could earn on themselves instead of “lying” on the account. We placed 15% of our savings on deposits, 10% in OFEs, and almost 18% are shares in unlisted companies. Investing in shares and bonds represents only a small percentage of our financial activity: the stock exchange has 2.7% of all funds, and we hold less than 6.7% of capital in investment funds.

It is optimistic that more and more respondents see the benefits of saving money, not only the value of the savings we accumulate increases, but also the number of people who have them. According to the report prepared by the ING Group, 69% of respondents have their funds put aside, and every third respondent is satisfied or very happy with their amount. Most people have savings of 1 to 3 monthly salaries (31% of responses), 11% set aside less than one salary, and 19% of respondents have funds corresponding to the annual salary.

Can everyone afford saving?

Can everyone afford saving?

Telling yourself that I earn too little to be able to put off something is one of the most common myth-saving myths. The more that if you believe the statistics, we do not earn badly. According to data collected by the Central Statistical Office, the average salary in March 2018 in companies employing at least 10 employees amounted to PLN 4,866.56 gross (in February it was PLN 4,559.72 gross, and in January – PLN 4,588.58 gross). The minimum salary in January was PLN 2,100 gross (an increase of PLN 100 compared to last year).

How to start saving and planning your home budget?

How to start saving and planning your home budget?

The answer to the question of how to start saving is associated with another, equally important issue, i.e. how to plan a household budget. It is the proper management of our funds that will allow us to accumulate financial surpluses. What helps keep control over our finances can be specially designed programs (e.g. smartphone application), as well as a simple spreadsheet.

You will also need to change your current habits. Here seemingly insignificant changes can be helpful here: turning off the light when we are not in the room, taking a shower instead of taking a bath or writing down in advance what we plan to buy. To save money at home, we can also consider switching electricity or gas suppliers, and even … a mobile operator. It is not excluded that the competition will offer us better conditions, thanks to which we will pay less for utilities.

In addition, all family members should be involved in saving money and planning the home budget. First of all, their needs should be included in the list of expenses (this does not mean, however, that we must agree to finance every whim), secondly, saving is a team sport, and respecting money is worth teaching children from an early age. The sooner we develop good habits in them, the better they will manage financial management in adulthood.

How to save money? tips

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Saving money and planning your home budget should start by changing your attitude. First of all, regardless of how much we earn, we are able to save a certain amount. Secondly, good organization is the key to success, because until we record our expenses, we do not know how much money “disappears” each month from our account. Meanwhile, even buying food for work every day in the city gives an amount per week that significantly reduces our budget. Third, the easiest way to start saving is to give up unnecessary expenses.

It can be a too expensive Internet account, an unfavorable contract with a mobile operator, or shopping made on the spur of the moment, which then goes to the bottom of the wardrobe. To eliminate unnecessary costs, write down how much and every month you spend. Thanks to this, “black and white” you will see which of them you can easily give up.

What else you can do is to treat saving money as another bill to pay, so you will definitely find space for it in your home budget.

Let us remember that saving with the head is not synonymous with the fact that we will deny ourselves everything. The same applies to how to effectively plan your home budget. The key to success is not so much counting with every zloty as it is controlling expenses and limiting the unnecessary ones to the necessary minimum. If we can, we should look for additional sources of income.

A good idea is to resign from these services that we do not use, for example, subscription to a magazine that we have not read for a long time. What will make additional (and not a big deal!) Funds to the household budget is putting away all kinds of stimulants.

Saving – advantages

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What gives you money saving is above all a sense of security and developing financial discipline. If you are thinking about when to start saving, then know that the best time is now, because it is never too early or too late to take care of your future.

We also remember that saving money is a process, so it’s worth setting goals that you can achieve. If we earn the lowest domestic income and plan to save 500 zlotys a month from it, then we will probably be quickly discouraged and find that in our case saving money does not make any sense. How quickly we plan to accumulate specific capital should be tailored to our needs, earnings and opportunities. In the home budget, it is also worth including funds for entertainment, because “not only by saving man lives.”

Saving money. This you must remember!

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Once you start your adventure with saving, you’ll quickly find that although you still earn the same amount, there is more money in your account. This in turn will give you a sense of financial security and allow you to accumulate funds for sudden expenses.

So how do you save money in your home budget? The hardest part is … to start. Once you take this first step, each subsequent one will be easier. Over time, saving so much will get into your blood that you will stop noticing at all that you are planning expenses. We hope that thanks to our advice you will be able to build a financial pillow without tightening your belt.