Dhruv and Sachin were close friends in college and after graduation started their career in the same company. As years passed, they moved to different companies but kept in touch. They would speak to each other over phone and during one such conversation, Dhruv told Sachin that a month ago he left his professional career for good and is now setting up his own ad agency, something he wanted for a long time. An astonished Sachin asked him how managed to afford it and Dhruv replied “financial planning.”
Sachin would not have believed had anyone else said those two words but
coming from Dhruv’s mouth, he had no reason to disbelieve. So, the question
arises- can everyone afford early retirement?
Well, yes but to make it happen, you must take your finances seriously from an
early age and invest wisely so that are able to become financially independent
at a younger age like Dhruv- a prerequisite for early retirement. It does not
matter which profession you are in. Whether you are a banker or a teacher or a
writer or an IT professional, early retirement can become a reality for you.
Here are some tips to set you on the retirement path.
Save early, save big
All those folks who have been able to retire early started saving from
day one of their jobs. They did not wait till their 30s to get into the saving
routine. Also, they did not save a meager 10-15% of their salary, a customary
amount most youngsters put aside in the name of savings. They allocated a
larger sum for the savings head and contrary to what you would like to believe,
not all were in high-paying jobs. So, what is the suitable amount that should
be saved? It should be more or equal to your present age, of the income and it
is possible to save in this bracket if you are cautious about your expenses and
plan the savings accordingly. Always remember a rule: Income-Savings=Expenditure.
Controlling an extravagant lifestyle, availing high-income opportunities such
as overseas assignments can help you save a huge amount of money.
Invest in high-return investment products
Merely saving money is not enough. You also have to make sure that the
money grows and therefore, you must look for smart investment plans such as SIP
(systematic investment plan) and equity-linked schemes. The key is to strike a
balance between different traditional and non-conventional investment plans so
that you are able to capitalize on the risky but high-return equity schemes as
well as the safe but low-return schemes. All of this needs a little effort,
research, and planning on your part. Investing in the right products will
ensure a big post-retirement nest egg that will keep all your financial worries
at bay and you will be able to lead a comfortable life.
Take risks
When you are young, your risk-taking ability is significantly higher
than your post-40 or post-50 version. You do not have a family and your
liabilities are very less. So, you should take the plunge during this phase.
You should invest in mutual funds and other cash-flow generating assets as they
ensure regular income in the form of dividends, capital gains, and interest
which you can invest further. The magic of compound interest works here. Also,
such assets give you the confidence to go for high-paying, high-risk investment
products because even if you get shocks in some schemes, you will be able to
get back on your feet without any damage.
So, the mantra to
retiring early is early financial planning and the good news is that it is not
rocket science. You only need to have a decent income and the will to save and
invest. For savings, you have to plan your expenses and for investment, you
have to plan your savings. The former is in your hands and you can do it on
your own but the latter may not be so.
Not everyone is competent at financial planning and if
you feel that you need help to plan your finances at a pocket friendly cost then you should visit www.findvise.com .
A professionally managed robo advisory platform will analyze your aspirations and
finances in most scientific way and help you to allocate your savings in the
most gainful manner and you will be able to make the most of your investment.
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