You may be just starting your career, or you may be nearing your retirement – in either case, you have the opportunity to build your dream retirement corpus. However, if you are too close to your retirement, it will be a bit tough. The sooner you start to plan for retirement, the easier the journey. However, it is never too late – you may be in your 40s or early 50s – if you have not done it till now, you can do it.
Today, we will talk about steps that can help you build a dream retirement corpus. Below are six steps – you should follow them in the same order:
When you want to retire – The first question you need to answer is when you want to retire? Today most people want to retire early. Gone are the days when retirement meant 60 years. Today, many people are dreaming and working to have an early retirement. You have to decide when you want to retire – it will help you in other steps of the journey.
Retirement corpus required – Based on your retirement age, and other factors, you can calculate the retirement corpus. You can get a rough estimation with the help of online retirement calculators. The earlier you retire, the larger corpus you need. You will have to assume life expectancy and inflation in the calculator. You should take a life expectancy of 80 years (or higher) and inflation as 6%.
The other important parameter that drives your retirement corpus is your living standard – your monthly expenses. The online calculators will only give you an approximate value. If you want to get a closer number, you should contact a financial advisor.
Start today – Retirement planning is mandatory in today’s world. There is no way you can survive without it. Investors delay investment in life insurance since it is not an urgent need. Similarly, they delay investing for retirement. You should start today even if you have just started earning. You should contribute to the retirement corpus – the amount can be small.
Learn about compounding and its magic – once you understand it, you will not delay your investment. Compounding is the ability of your investment to generate returns on your returns that are reinvested. Go to an online compound calculator and see the difference in your returns with 20, 25, and 30 years investment periods. The difference is massive, so if you can give your money time to grow for 30 years by starting today, you can retire early and with your dream corpus.
Automate your investment – Perhaps the most vital point in the article. Many people start investing for retirement corpus. However, they stop somewhere in the middle. They get deviated from their investment goal, or retirement corpus goes down in the priority list. To ensure it does not happen to you, you need to automate your investment. You can automate your investment in mutual funds through SIP. You can do the same in stocks.
When other things come in life, most investors don’t get the time to track, pick stocks, and don’t invest in stocks.
You can regularly invest in stocks using Jarvis Invest. It will take care of your risk and portfolio by letting you know what to buy, when to buy and when to sell a stock.
Control your expenses – A recent study states that most people don’t save for retirement because of higher expenses. Also, there are more urgent things to take care of in the short term. You need to understand this – unlike the previous generation, where most people in India had a government job and pension support, the current generation has no such perks. Hence, everyone, without exception, has to plan for it. Set aside your reasons (excuses) and start investing in your dream corpus.
One of the essential steps in this is to budget. Budgeting is about managing your income and expenses. Look at all your expense statements and evaluate where your money is going. If there are ways to minimize spending, please do it. Invest the amount towards the retirement corpus. If there is no way to reduce expenses, you should focus on increasing income – a job change or some freelancing.
Invest in the correct instruments – The last point on the list, but you can’t create your dream corpus without following it. You need to invest in the right financial instrument to create a retirement corpus. You should be clear with one point – you cannot create a retirement corpus by investing only in fixed deposits and gold (however, you should have them in your portfolio) even if you follow all the above points. You must have equity exposure. Equity is a risky asset class. However, when you invest for the long term, the risk reduces. If you don’t have the market knowledge and neither interest, you can use Jarvis Invest. It will create a portfolio for you. Not only this, it comes with a risk management system that ensures your losses are minimum while returns are higher.
Closing remark
Creating a dream retirement corpus may seem challenging to start. However, once you start your journey, the ride will be smooth. If you need a guide in the journey, Jarvis Invest is the right guide for you.
Your first innings may not have turned out the way you would have wanted it to be – for a number of reasons, most of them beyond your control. However, you can plan the second inning of your life just the way you want to – make your dream come true.