Happy Retirement Planning
Happy Retirement Planning
Why Plan for Retirement? Because you can’t afford not to! – Retire your worries by Investing Right:
- To protect your family against Financial Risks
- Early Death
- Critical Illness
- Accidents causing disability
- To Reduce or eliminate Personal Debt
- Rationalize your EMI Linked purchases
- Reduce credit card debt
- Stop unnecessary acquisitions
- To Enjoy the same quality of life after retiring. Remember, you could live to be a 100 and can make age wise century.
- To give your Children Everything they need. A Great Education, wedding, dream house of small family and may be help to start a business
- To pay for Serious Medical expenses. You may not be eligible for Health Insurance once you are older or above 60 years of age.
- To leave a Legacy after you are gone. Make sure your kids are happy with their inheritance!
Many people opt for premature retirement, much before they are 60 years of age. This decision could be guided by medical, personal or professional reasons, or a combination of them. If you are also looking at premature retirement, you will need to make several changes, both big and small, in your strategy. You will have to shape your portfolio keeping the new goal in mind. You will also have to adapt to the new realities, both on the emotional and financial fronts. Here is how you should approach the issue and deal with the challenge.
Ask yourself the fundamental question: What will I do after retirement? If you don’t have a clear answer, you might be in for tougher times. Also, get an idea of the kind of planning and investments required.
An early retirement might also require you to develop some new skills. Have an action plan for it. With rising life expectancy, the non-earning period spans almost 25 years for people retiring at 60. For those retiring early, it could be as long as 35-40 years. A longer retired life will mean a longer battle with the ill-effects of inflation. Accept that an early retirement may entail compromises and tweak your spending accordingly.
When you are young, thinking about retirement planning may not be the coolest way to spend your time, but if you give it a thought or two, you may see that it is worth your time. Just like you need money today to pursue the lifestyle you like – shopping, traveling abroad or buying that set of Instagram worthy wheels, you also need money tomorrow to maintain a comfortable life, even when you stop working. Fortunately, millennials have time on their side and when it comes to saving for retirement, time is a great asset. Harnessing the power of compounding through reinvesting the returns of your investments can have a great multiplier effect. As an example, if you invested just Rs.5,000 each month regularly starting your 25th birthday for 30 years and got 12% annual returns, on your 55th birthday, you would have given yourself a present of about Rs. 18 lakh.
So how can you save money to retire in comfort and style? Here are ten tips to put you ahead of the curve:
Your first step would be to get a fix on the retirement age. Next, prioritise your financial goals and have targets (in terms of the money needed) for each of them. Remember, the timing of some of your major financial goals, such as children’s higher education and wedding, could well happen after retirement, if you exit prematurely.
Keep substantial savings in growth investments, such as stocks, equity mutual funds, real estate and gold, as, apart from giving you confidence, they help you create a buffer for uncertain times. Equities help you offset the damage caused by inflation, generating highest returns among all asset classes over the long term. Ideally, put 60-80 per cent of your assets in equities. Earmark each portfolio for a particular goal and, as you near it, start moving funds from volatile equities to less volatile debt assets to preserve the accumulated capital.
THE POWER OF COMPOUND INTEREST AND WHY IT PAYS TO START SAVING NOW
Have you ever wished that you could have more money, without all the effort? Or are you concerned you won’t have enough saved for retirement or your child’s education?
Luckily, there’s actually a simple way to accomplish those things if you’re willing to learn how to put your money to work for you. It’s called compound interest, and it can help you exponentially grow your wealth.
WHAT IS COMPOUND INTEREST?
Compound Interest is the strongest force in the Universe. Compound interest can be defined as interest calculated on the initial principal and also on the accumulated interest of previous periods. Think of it as the cycle of earning “interest on interest” which can cause wealth to rapidly snowball. Compound Interest will make a deposit or loan grow at a faster rate than simple interest, which is interest calculated only on the principal amount.
Compound interest favours those whostart early, which is why it pays to start now. It’s never too late to start — or too early.
A combination of return and time can compound WEALTH at an un-imaginable rate.
If you want to easily accumulate wealth and take advantage of the magic of compound interest, it’s important to start early and be consistent.
Time is your best friend and the one thing that makes compound interest so effective. Saving now and starting early will pay dividends in your future and help you accumulate extra money. That’s the power of compound interest and why it pays to start saving now.