Believe it or not, it is actually possible to build wealth for an early, secure retirement without winning the lottery.
Unfortunately, many people miss their chance to build a sufficient nest egg for their future because they fail to understand the simple principles, or they fail to take effective action.
Here’s a few simple steps outlining how you can retire early and ensure you’re well-funded into old age:
Make a plan
One of the biggest mistakes most people make is failing to create a written plan for building financial security. It’s impossible to achieve financial success if you don’t have a plan to help you accomplish it.
That means you need to create written cash flow and savings goals, and then formulate a plan that helps you achieve those goals.
Review your lifestyle
Many people would rather look wealthy than actually be wealthy. If you consider how many people you know who are in debt, compared to those who are wealthy, it’s easy to see why. You don’t become rich by spending all of your money, which means you need to control your lifestyle to achieve success and relaxation well into your twilight years.
Try and avoid debt at all costs; easier said than done, of course! Instead of paying interest and compounding your debt, you need to be earning interest on your savings and compounding assets.
The types of investments you make will depend on both your financial situation and your age. Someone who is in their early twenties can make riskier investments, as they have much longer for the markets to stabilise than someone who begins investing in their forties or fifties.
Stocks are an excellent investment option, with strong European stock performance being reported recently and a more positive global economic outlook, despite growing geo-political tensions on both sides of the Atlantic. But you also need to consider other investment opportunities, such as real estate, investment properties, and tax deferred retirement plans.
Varying your options with a mixed portfolio and avoiding putting all your eggs in the one basket is something we’d highly recommend.
The reality is that most people reading this blog post will have more than enough money passing through their hands throughout their lives to have a relatively comfortable retirement. But few people will actually succeed in this mission, and that boils down to one thing’ a lack of knowledge around how to effectively manage money.
Procrastination is one of the biggest reasons why so many people fail to retire early. And one of the reasons why so many people procrastinate is because they don’t the financial intelligence to make smart decisions.
That’s why it’s important to invest in your financial education by reading, taking courses, and researching each week. Resources such as Investopedia are a Godsend to wannabe tycoons and sensible retirement planners alike; as the old saying goes, ‘fail to prepare; prepare to fail’. Having a solid base knowledge in how the finance economy functions and operates will mean that your financial intelligence will be continuously growing along with your wealth on the journey towards an early retirement.
Put your retirement fund out of reach
We should all have a savings account with enough money in it to cover us in the event that our car breaks down, we lose our job, or have a run of bad luck. But the money you’re setting aside for your retirement should be almost impossible to reach.
Place your retirement money in accounts that are hard to reach, so you don’t end up raiding it when you go through difficult times.
Retirement plans will allow you to enjoy compounded interest, while avoiding or deferring taxes. Real estate is another good option to keep your money tied up and working for you, the opportunities are endless; all one needs is the self-awareness, dedication and forward-thinking to start prioritising their future and all else will fall into place.