Starting out (Far away)
If you haven’t thought about retirement and other important life-stage milestones yet, don’t delay it any longer.
While you may not have any major financial commitments or family obligations at this stage, like getting married or starting a family, you can invest some of your disposable income towards achieving these future goals and a financially secure retirement.
You should save as much as possible and build a healthy investment portfolio before your circumstances and priorities change. With the right advice, you can lay prudent and long-term financial plans in place to achieve important life goals.
Here are some ways to start saving and investing for a financially secure retirement:
Save and invest early
While starting out, age is on your side and vital saving strategies can help you take advantage of compounding and grow your earnings.
- Increase how much you're saving - Monitor your expenses for two or three months to determine what comprises your expenses and identify areas where you can save more.
- When you get a pay hike or additional income, increase your savings contribution before you get accustomed to extra earnings.
- Maintain an adequate cash reserve, typically covering three to six months of expenses as minimum base liquidity.
Manage your investments
As you build your investment portfolio, you'll need to ensure you have the right mix of asset classes to provide liquidity, absorb the impact of inflation and create a higher future income.
- Assess your risk tolerance and determine the asset allocation for debt, equity, mutual funds, gold or real estate that suits you best.
- Aim to maximise returns by focusing on the right investment vehicles at this stage.
- Maintain a diversified portfolio of investments and ensure the overall portfolio keeps pace with inflation.
- Take into consideration attributes such as cash flow, liquidity and tax implications.
- Set up regular contributions towards your investments.
Plan your life-stage goals and retirement
- Think about your retirement expectations and identify goals including all important life-stage goals.
- Think about your retirement lifestyle and how you need to plan for it.
- Think about your retirement housing needs.
- Plan your savings and investments to create a corpus for meeting your family commitments and thereafter a secure retirement income.
- Ensure adequate insurance covers are in place to protect you and your assets from any unforeseen events.