With an increasing number of individuals earning salaries that can lead to significant savings, many professionals are exploring the idea of early retirement, say financial advisers. So, if you’re hoping to retire early, you’ll need to make smart investments. And that’s not enough, you need to start planning for your retirement goals at an early stage in life.
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Experts share some tips for those who are planning to retire early in their life.
Devi Yesodharan, Co-Founder and CMO of Trendlyne said that you need to start investing in your twenties and focus on equity mutual funds, which have higher returns – nearly double that of traditional products like FDs.
Second, you also need to make sure that your house or apartment is fully paid for by the time you retire. If you are planning for kids, have them soon, and invest for them separately, he added.
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Don’t make this error if you are planning to retire early
Delaying investments is the most frequent financial error made by people. Amit Gupta, MD, SAG Infotech said this typically happens because people think they have enough time to achieve their financial objectives, so they figure that delaying 5 to 10 years won’t really make much of a difference. At a later time, though, this delay may make it very difficult to achieve your financial objectives.
Amit Gupta suggested two easy ways for investors in their 20s to begin investing at a young age.
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1) Employees Provident Fund (EPF)
Enrolling in EPF to begin retirement savings as soon as one starts earning is the first of them.
2) Systematic Investment Plan (SIP)
The alternative is to begin a Mutual Fund SIP. Investors may witness their money increase over time by starting even a tiny SIP of ₹500 per month, which will serve as motivation to continue saving and investing in the future. However, one must start investing right away and take the initial step. Individual investors must devote the time and energy necessary to acquire fundamental financial knowledge. One’s money will be better organised as more one can understand about investing. One will edge closer to their financial goals even if they are only able to save a tiny sum, like ₹1000 or ₹2000 each month.
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3) Mutual Funds
Mutual funds help you to get exposure to different asset classes and subclasses which enable you to get pleasant returns. “Mutual funds’ systematic investment plans(SIP) which are considered one of the best ways to invest for retirement planning. through SIP one can invest in a mutual fund of their own choice based on their investment needs and risk appetite. Mutual funds help you to get exposure to different asset classes and subclasses which enable you to get pleasant returns,” said Siddharth Maurya, Resource Specialist, Expertise Real-Estate and Fund Management.
4) Stocks
Historical data shows that equity has been performing as the best asset in the long term and has the potential to create wealth for investors over the long run. “In the last 10 years NIFTY50(index of 50 largest stocks)in India, gave 10.3% CAGR returns (Source: NSE India).so if you are saving through stocks monthly for 10 years you should have accumulated a number of 2.7crores with a monthly investment of 55000 per month,” said Siddharth Maurya.
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5) Real Estate
Real estate is an asset with high returns as it offers a hedge against inflation. Atul Goel, MD, Goel Ganga Group said that real estate is a great way to secure your retirement bringing additional income sources to you and for a good reason investing in real estate provides consistent cash flow, yields high tax benefits, and adds diversity to your portfolio.
“When you are making a real estate investment early, first decide the kind of property you wish to buy. If a long time period and appreciation potential are considered, investing in a land parcel would be wiser. One who has invested in land, later on, can build houses for rental purposes. By investing here you get a monthly income for the rest of your life which makes investment easier,” explained Atul Goel.
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“Once who plan to invest in real estate sector need proper planning & knowledge that play a vital role and consumers should have immense information about the industry related trend that can be beneficial and things like financial advice, tax breaks etc,” said Vishal Raheja, MD, InvestoXpert.com.
6) Gold
According to Siddharth Maurya with the help of your financial advisor, you can also invest in gold, bitcoin, debt funds, etc.
