Smart retirement planning and some shrewd investing can clear the way for an early and wealthy retirement. The problem comes when people are so engrossed with their day to day existence that they ignore all future planning. However, the ones who are able to beat the lull of a routine life and manage to think forward stand to gain much more in the long run.
Here are some tips that can help to drop out of the rat race without losing out on the comfort of cash:
Save Enough and Save Early
Start saving early enough in life because that is the surest path to an early retirement. At that time the amount of savings may appear minuscule, but over a number of years they will grow into a substantial figure. The higher the propensity to save and stash away, the better will be the dividends upon retirement. A strong nest egg helps a person to sail through difficult times, recessionary phases, lay off periods, illnesses and other contingency situations comfortably. On top of that, it ensures a happy and prosperous retirement.
Place Savings in Diversified Investments
Optimized utilization of the savings is crucial to a wealthy retirement. If the savings are left idle and fetch very low returns, inflation is going to offset any chances of real wealth creation. Therefore, the goal must be to beat inflation continuously, and let the savings grow in real terms. Therefore, a smart portfolio of investments should be created over a period of time. Diversity of the portfolio is important to spread the risk, and achieve a perfect balance between risk and returns. That ensures a financially secure and reasonably wealthy retirement.
Aim for Owning a Home
Several surveys over the years have shown that one of the common habits of most rich and successful people is that they make sure to own a home. Own home ensures financial stability through any situations because there is no drain of income in rental costs. Secondly, the rise in real estate values over a period of time makes it a wealth-creating asset. Therefore, instead of spending the surplus income on fancy cars and other expensive consumables that depreciate quickly, it is wiser to invest in building one’s own house.
Choose Investments with a Longer Horizon
Some investments such as REITs may have a longer investment horizon compared to stocks. But the volatility in the investments with longer horizon is much lesser, and the returns are substantial in the long run. Short term earnings do not interest someone who has a long term vision for wealth creation. Therefore, long term investments with compounded returns at the end of the day are a much better option for someone aiming for an early and wealthy retirement.
