Retirement planning guide for young investor
The first step in the direction of making a successful retirement plan is setting clear, well-defined goals, including a firm decision on when you intend to retire. In India, 60 years is considered the benchmark, but it may differ person to person depending on lifestyle aspirations, financial goals, and health outlook.
The next step is to decide on your desired post-retirement lifestyle, whether you want to travel, volunteer, or pursue your passion. The more specific your vision is, the more accurate the financial roadmap will be. And that means you have to estimate how much that lifestyle will cost after factoring in current expenses and future changes, including inflation, which will erode purchasing power over time.
After making all calculations, you have to set saving targets aligning with your investment strategy. As time is the most powerful asset for young investors, the earlier you start, the greater the long-term reward will be.
Starting to save early in life will allow you to utilise the power of compounding to your advantage, thereby ensuring that their money keeps growing exponentially over time. For instance, starting Systematic Investment Plan (SIP) investments in your 20s even with small amounts can help build a substantial corpus over time, enabling financial security at retirement or even an early retirement.
Another major advantage of starting early is that it allows you to take advantage of high-growth investment options such as equity mutual funds, which are considered volatile in the short term but tend to perform well over the long run, making them ideal for young investors with time on their side.
Once you have set goals, made investment strategies, and started saving, a disciplined approach is all you need. You can start by listing all your monthly expenses, which will give you a clear picture about the money and help you in identifying unnecessary expenses that can be curtailed. If you follow this strictly, you will be able to allocate the required funds to retirement savings, which will allow you to achieve all your investment targets.
As retirement planning isn't only about saving money, it is more about securing your future. Starting early will empower young investors with choices, confidence, and the ability to lead life on their own terms.
(The writer is a Associate Director, Geojit Financial Services Ltd)
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