These are some questions that most of us have on our minds. Yet very few ever give it a serious thought, or take steps that actually bring us closer to these goals.
In our experience, what people are actually looking for is not so much retirement planning but financial freedom. A kind of freedom that offers them the opportunity to not worry about where the next pay-check will come from, a freedom that enables piece of mind, and a freedom that most importantly lets them choose what they want to pursue next based on interest, and not based on the income it brings.
So, what stops us from doing this? Why aren’t more of us pursuing things that we really want to?
The simple answer is in the amount of savings we have accumulated so far, which in turn is linked to how much we have saved in the past, and how well we have invested that money.
Here are four basic rules that we strongly recommend you follow, to attain financial freedom or early retirement
What not to do?
While we’ve told you what to do, it’s as important, if not more to tell you what not to do. Below is a long list of don’t do actions, in a somewhat random order:
- Short-term equity trading
- Investing with borrowed money
- Spending more than needed
- Not saving enough
- Buying any insurance product except term policies
- Investing in equity shares without understanding the specific company
- Trying to time markets
- Not investing in equity assets
There will be people to whom all of this might sound alien, and there might be others who might be aware of some of these principles. However, knowing is just one thing. It’s more important to internalize these principles and practice them lifelong. That’s what really makes the difference. Financial freedom or early retirement can come easy or it can come difficult; but mostly it’s a choice one has to make for oneself.
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More on retirement planning below
Make the most of your retired life!
You have worked hard and built a life for yourself and your family—one full of dreams, achievements, and happiness. Now, as you near retirement, you may have new dreams and goals in mind.
You may want to spend more quality time with your loved ones or travel the world. You may also want to fulfil commitments like your child’s higher education or wedding.
With a little retirement planning, you have the power to fulfil your wishes while maintaining your financial independence.
Below we will cover some aspects of retirement planning.
What is retirement planning?
Retirement planning means preparing today for your future life so that you continue to meet all your goals and dreams independently. This includes setting your retirement goals, estimating the amount of money you will need, and investing to grow your retirement savings.
Every retirement plan is unique. After all, you may have very specific ideas on how you want to spend your retired life. This is why it’s important to have a plan that is designed specifically to suit your individual needs.
Why plan for retirement?
You retire from work, not life. You may have a new set of dreams for your post-retirement life. At the same time, you may also want to maintain your day-to-day lifestyle without worrying about expenses.
By planning in advance, you can define the path to achieve these life goals without any financial dependence.
Here is how retirement planning can help you:
- To maintain your standard of living
- To fight inflation
- To leave behind a legacy for family
- To be ready for emergencies
- To be prepared for a healthier longer life
- To fulfil any goals you had set for retirement
Where to invest for retirement?
There are many ways in which you can do your retirement planning. Some options are growth oriented and may attract higher risks; others may help you protect your wealth in case you are already wealthy and have enough.
A retirement plan is therefore best customised based on your specific individual situations and should take into account your existing wealth, your age, current income, living expenses, expected inflation and so on. We are happy to build out such plans for our customers using a mix of investment products that best suit the requirement which may include mutual funds, bonds, PMS and deposits. Please contact us for a complimentary consultation.
Step by step guide to retirement planning
- Consult an experienced financial advisor
- Build out an expense summary that is an accurate representation of your monthly expenses
- Identify and list down all wealth accumulated so far including property and potential inheritance
- Set aside money for any planned major expenses
- Ensure you have adequate health insurance cover
- Make sure your asset allocation is not too defensive whilst still meeting your expense requirements
Your financial advisor should be able to guide you through this retirement planning process. Good luck.