Thursday, December 19, 2013

Dreaming Of Being Rich Even After Retirement

In the earning stage of life you can earn from various sources. But a time arrives when you have to give up every other source of income and lead a stress free life . So the after earning life have to be pre-planned. It can be made possible through few necessary conditions : diminishing debt to a minimum level, living a frugal way while in the earning stage and investing your savings skillfully.

Eliminating Debt While Reaching Retirement

Debt as we know it is a huge burden. The high interest on different types of debt can eat up maximum percentage of one's income. And failing to pay up the interests would lead to more debt and eventually step into to a stage where paying up could get impossible and finally end up in bankruptcy. All this would result in negative credit score which you absolutely need to avoid if wish to spend a well to do life after retirement. Thus debt should be eliminated while reaching retirement.

Dreaming Of Being Rich Even After Retirement

Living Below Your Means

Over spending habit has to be bumped off at all cost. You have to live within a budget and minimize your expenditure. Having an emergency fund and saving for retirement from an early stage is highly recommended. Failing to conduct these would result in high expenditure, sometimes even more than what you income and eventually make your monetary position fall big time.

Trying to be frugal, saving money and living on a budget will help you immensely to live the dream life after retirement. You never know what comes next and thus planning ahead is an extremely clever thing to do.

Investing Your Savings Skillfully

You may find numerous options when it comes to investment. But those all can be narrowed down to two: either you can be a loaner or an owner. A loaner is someone who invests his money in return of interest whereas an owner is somebody who invests in someone else's business.

A huge proportion of people can be found to invest money in super-safe investment like government bonds(which comes under loaner category) and get interest up-to 4%. But under inflation it will be very hard to sustain under this category.

Stocks and Debenture investments(which comes under owner category) beats inflation by approximate 8% . Thus it is far better than government bonds but comes with bit of a risk.

For safer investments you should invest your savings eggs both as loaner as well as a owner. Investments can be made monthly in small amounts to reduce risk percentage. 

A common rule which is very much effective can be applied while investing. The rule goes like this : The result you would get after subtracting your age from 100 could be the percentage of savings you can invest. Like if you are 30 years old then you can invest 70% of your spare money(Money incurred after saving for emergency funds and retirement account) to stocks or debentures whereas if you are 75 then you can invest 25% of your long-term saving.

Making your after retirement dream come true is not an unattainable task. Maintaining some few rules and regulations and changing a few expensive habit while you are earning would make the dream much easier to accomplish and land you in a wonderful after retirement life.

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