Who doesn’t prefer leisure over work? Early retirement is a distant dream for most millennials. Convert this dream into reality with a better retirement plan. Here are 3 smart money moves that can help you with early retirement. Plan well to enjoy comfortable retired life!
Start With Early Investments: It is quite essential to start investments early on if aiming to retire early. Do not view retirement as a distant money goal and bring it down in the ‘to-do list’ of your money goals. Rather, make it a priority. Ideally, retirement planning should begin right when the earnings begin. Substantiate returns from the employee provident fund with other investment options that offer returns that beat inflation.
Check two cases for the variations in returns due to the delay in the investments.
In Case A, the individual started investing INR 5,000 per month in a SIP (systematic investment planning), with 12% returns every year, from the age of 25 years. By the time he reached 60, he could accumulate a corpus of INR 3.21 crores.
In Case B, the person started investing INR 5,000 per month in a SIP, with 12% returns every year, from the age of 30. He could accumulate INR 1.74 crores at 60.
The difference in returns in both the cases is almost double, while the difference in the investment is just 3 lakh rupees. This clearly explains the benefits of early investments.
Build Proper Insurance Kitty: Building insurance kitty helps protect your retirement kitty. Because even a single hospitalization in the family could ruin your retirement savings. Buy not just health insurance but others like an accident and home insurance to avoid the hole in the pocket during emergencies. Your premiums towards these insurances would even safeguard your retirement funds.
Create Multiple Income Sources: More importantly, create multiple income sources to save, invest and accumulate more. Through mutual fund investments, you can generate wealth that beats inflation. With conservative savings methods like FDs, would end up with low returns, which does not serve the purpose.
If you are worried of the market fluctuations involved with mutual fund investments, the volatility can be well dealt in the long-term investments. Invest wisely to ensure adequate retirement funding.
In conclusion, a good financial plan helps you reach your early retirement goal with ease. However, one has to start early savings, invest wisely and plan other financial goals too, so that the retirement goal is not disturbed.
For expert advice on planning and suitable investments for your risk profile and income, approach online fiduciary-like ArthaYantra. We offer personal finance advice at an affordable cost to every individual, irrespective of the income status.