Planning for retirement: long-term investment strategies

Planning for retirement is an extremely important task that should be started as early as possible to secure a financially stable future for your later years.
One of the keys to this planning is ensuring you have a strong enough financial cushion to maintain a comfortable lifestyle throughout your golden years. That’s why it's so important to have long-term investment strategies that ensure steady growth in your savings over time.

Below, we'll take a closer look at specific options such as pension plans, PIAS, mutual funds, and more to help you build a strong financial foundation for your retirement.

1. Pension plan

Pension plans are among the most popular retirement planning vehicles, offering valuable tax benefits and encouraging disciplined long-term savings. You can contribute either as a one-time payment or on a regular basis to a portfolio selected by the management company. These contributions follow pre-determined return and risk criteria established in the plan's investment policy.

• Tax advantages: Contributions to pension plans are tax deductible, which lowers your taxable income and reduces the taxes you owe in the short term. Plus, the money you invest in the plan grows tax-free until you withdraw it.
• Long term: Savings in pension plans can’t be accessed until at least 10 years have elapsed since the investment, or until retirement. Withdrawals are allowed in exceptional circumstances, however, such as disability or serious illness.
• Investment flexibility: Pension plans can include a variety of assets, such as stocks, bonds, and mutual funds, so you can choose a level of risk that matches your investment profile.

MAPFRE has just launched MAPFRE Puente Garanti VI, which offers a capital guarantee and a return of 11.20% (2% APR) on the initial investment at the end of the term (April 30, 2030).

2. PIAS (Individual Systematic Savings Plans)

PIAS are another financial product specifically designed for retirement, life savings insurance plans that invest in funds and offer interest that may or may not be guaranteed.

• Long-term savings insurance: PIAS function as life insurance policies to which the holder makes regular contributions. The goal is to accumulate capital that can later be converted into a life annuity.
• Favorable taxation: If the savings are held for at least five years and then converted into a life annuity, the income isn't subject to taxation, making it a highly attractive product from a tax perspective.
• Guaranteed returns and flexibility: While some PIAS offer guaranteed returns, many offer the opportunity to invest in a diversified portfolio, which can increase potential long-term gains.

In this segment, MAPFRE offers vehicles like PIAS Value 6M, which boasts an effective interest rate of up to 2.5% for the first six months. After that period, a reviewable rate is applied every six months. The maximum age limit is 80 years old, with regular premiums starting at just 40 euros per month and extraordinary or single premiums starting at 600 euros.

3. Mutual funds

Mutual funds are among the most versatile and accessible financial products for anyone looking to build long-term wealth for retirement.

• Diversification and professional management: Mutual funds pool the capital of multiple investors to create a diversified portfolio of assets, such as stocks and bonds. This approach reduces individual risk and provides the opportunity to participate in global markets that would otherwise be out of reach for smaller investors.
• Liquidity: Unlike pension plans or PIAS, mutual funds are liquid products that allow you to access your money more easily, though this isn’t the best idea if you’re trying to save for retirement. On the other hand, mutual funds don’t provide the tax advantages that come with contributions.
• Wide range of options: There are mutual funds to suit every risk profile, from conservative to more aggressive options. You can tailor your investment strategy to your time horizon and risk tolerance.

MAPFRE AM, MAPFRE's asset management company, offers a wide range of mutual funds tailored to the needs and objectives of each investor. There are several equity options, for instance, that are diversified by market, risk level, and even sustainability, like MAPFRE AM Inclusión Responsable, which invests in companies dedicated to integrating people with disabilities into their workforce. MAPFRE AM also offers fixed income options with different maturities, among a long list of other options. You can view the catalog here.

4. Unit-linked insurance

Unit-linked life insurance provides death coverage while allowing you to invest in a variety of funds.

• Flexible investment: Unit-linked products are long-term investment options that give holders the flexibility to choose which funds to invest in. They also let you switch funds at no additional cost, so you can adjust your risk based on market performance.
• Taxes: As products linked to life insurance, unit-linked products enjoy tax advantages, as they are only taxed on the income generated at the time of redemption.

MAPFRE offers a wide range of unit-linked solutions, structured through mutual fund portfolios tailored to each customer's risk profile, investment duration, liquidity needs, and even their sustainable investment objectives, among others. This range includes MULTIFUNDS products, featuring vehicles such as MF Open, Horizon Investment Program, MF Strategy, MF ESG Commitment, and more.

Saving and investing for retirement are important objectives that require effective strategies and the right financial products. Pension plans, PIAS, mutual funds, and other products such as PPAs or unit-linked options offer a variety of choices to suit different risk profiles and financial objectives. By choosing the right product and staying focused on the long term, you can make sure your future is more stable and secure.

It’s a good idea to consult with a financial expert to choose the best combination of products to meet your personal needs and goals, and to maximize the tax benefits of these instruments.