Millennials! Want to retire rich? Here's what you need to do
Many youngsters believe retirement is a distant reality, planning for which can be pushed back some years. What this usually means is that those in their 20s often feel they are too young to plan for their retirement! However, retirement planning becomes essential once you understand that eventually you will retire one day and your monthly pay cheque will cease to come. You need to build a substantial corpus during your working life for your money needs during retirement years.
Actually, the earlier you start the better. “Start an SIP in equity mutual funds early, maybe when you are 25. The amount you invest at this stage may not be much but even Rs 1000 invested every month will grow substantially. This amount will compound for the next 35 years and beat inflation - which is the whole point of planning for retirement early on,” said ER Ashok Kumar, CEO and co-founder of Scripbox.
Here are few tips which can help you make a big corpus at the time of retirement.
Start planning from today: The first and the foremost step are to think and implement your idea for investing towards your financial goal of retirement as soon as possible. Unless you start saving, you won’t achieve the wealth you desire to get at the time of your retirement.
Stick to the plan: The longest financial goal is the retirement goal and one needs to stick to the plan till it is achieved even if it takes 30 years to accomplish it. Do not divert your retirement savings to meet any other goal falling in between, unless it is very necessary and you do not have any other source of getting money.
Go for automated savings: The best way to achieve your long-term goal more precisely your retirement goal is to go with automated investing. Instead of investing lump-sum from time to time, SIP’s are the best way forward which can be done through Electronic Clearing Service (ECS). Choosing this option will help you deduct your amount automatically on a predetermined date every month. This process can be held for a fixed number of months or even done on a perpetual basis. Also, the process can be stopped anytime as per investor’s need.
Be debt free: “Make sure you are debt-free and own your primary residence. And keep your expenses in check -- don't spend more than 5% of your savings each year to pay for your living expenses in retirement,” says Kunal Bajaj, CEO & Founder, Clearfunds.com.
Take advice regularly: You should always take advice from a certified financial planners or adviser. They are financial doctors who will always give you a good and genuine advice. The better the advice will be, the easier would be for you to gain from your investments.