When you finally retire, you should not regret the financial decisions you took during your most productive years. If you are one of those who are in their 20s, 30s and 40s, these tips will help you not to regret it if you wish to keep your boat sailing into the deep seas long after you’ve retired from any form of gainful employment.
1. Hanging up your boots early: Some people make the mistake of retiring early, so they can ‘live’ life they missed during their most productive years. There’s nothing wrong with it if you are retiring early due to health concerns or have enough money to last a generation. But if your savings and retirement benefits will just about meet your immediate monthly requirements, it’s best not to retire early. In fact, we would advice you to retire late. And even if you have to retire because it’s government work, you can freelance as a consultant, advisor or lobbyist in your field of expertise. Working keeps your brain active and that’s great for general physical wellbeing. So there are two benefits to one good decision you make: delaying your retirement.
2. Carbon copy your parents: Some children end up mimicking their investment plans based on how their parents invested. But times change, and so should your investment strategy. For example, did you know that rental income will give you the least returns and FD is better than building a house on loan and giving it for rent? Cash in hand is always better than notional income after decades. Similarly, investing on gold and fixed deposits was the only way in the previous generation. Later, real estate and stock market came into the picture. Now, it’s a mix of everything – gold, mutual funds, commodity trading, company FDs and the stock market of course.
3. Hiring portfolio managers: If you are a small investor, handing over all your stock market investing decisions to a portfolio manager might be more harmful than useful. When it’s your money, you insulate yourself more than if it was someone else’s money. Simple logic. The best way forward? Try to learn how to invest yourself by going to various workshops. Once you have enough knowledge to open a Demat account and invest on the stock market using the internet, start small and never succumb to greed. No matter what happens, stick to your immediate and long-term goals. If you stay focussed, you will never lose. At best, you will break even.
4. Delay investments: This is the biggest mistake that some young working professionals make. They think they are not earning enough to spend, so why should they save. That’s why most professionals lose their mind when they are sacked arbitrarily due to various reasons. To keep up their lifestyle, they would have taken loans for just about everything… from household appliances to automobiles, cars and homes. When they lose their job due to recession for example, they don’t know how to pay off their loans.
5. Not taking out a health insurance policy: There are studies in India which point out that only 27% of people they surveyed had health insurance. That’s a significant proportion of people who are not without any health cover. This is yet another financial decision that will hurt most even before you retire. Imagine spending all your savings on medical bills? However, some companies do offer health cover. But what if you suddenly decide to go freelance after working full-time for 10-20 years? Who will cover your health costs? That’s why a health cover will insulate you from old age as your premiums are low and your unforeseen medical expenses are taken care of.
6. Not investing when young: It’s best to invest in long-term insurance plans while you are still young. Not only are the premiums low, but you also end up accumulating enough money that could come in handy during your retirement years.
7. Waiting it out: Whether you are in your late 30s or late 60s, there’s one thing you can do right now, which will ensure that your dependents will not suffer due to your lack of retirement planning. Just sign up on SecureLifeVault and upload all your medical, financial and other personal data that will only be available to your near and dear ones when you are no longer around. Planning for death is as important as retirement. And you can do that right away.