Learn how to retire young and retire rich with this simple guide. Retirement planning is one of the best things you can do today. Some people don’t even plan their retirement carefully. Some people just wait for their retirement. Isn’t it wonderful to retire young so that you can enjoy more the rest of your life? Isn’t it great to retire rich and comfortable? If you will ask me, I want to retire when I hit the age 50. What about you? When is your plan to stop working and start living the life you deserve?
The question is “when do you want to stop working?”. Maybe after 20 years or more or until you get rich. But the problem is you are not sure if you will really become rich or not. Don’t ask yourself about how do you become rich, ask yourself “when can you consider yourself wealthy?”
As for I know, a person is wealthy if he has a enough money to spend for his lifestyle (cost of living) even without working. Example, if you have $1,000,000 but your monthly expense is around $10,000, therefore your money is good only for 100 months or 8 years and 3 months.
How to Retire Young and Retire Rich?
Know the Cost of Living
It is important to know the cost of your lifestyle, the cost of your lifestyle is increasing while you are getting older. You need to plan your retirement while you are still young. In retirement planning, you must invest money. Some people tend to contribute money in their 401k plan and social security. However, you need to know if these instruments can really help you to retire rich and comfortable.
You need to have an earning asset wherein income can be use for your lifestyle. In order to acquire enough assets, you need to invest. You can choose high risk such as stocks or business or low risk such as bonds and cash deposits. Take note, low risk investments can’t help you to retire young. Your goal is to acquire your target earning asset as much as possible.
Steps to Retire Young and Retire Rich
1. Analyze the amount of your target earning asset during retirement.
These assets are earning passively, it means your money is working for you. Also, analyze how much should you invest per month to acquire your target earning asset. While computing, you can adjust your age, cost of living. Your target is to retire young, right? Instead of 65, do it 50 year old. Compute your target earning asset here.
2. Take advantage of leveraging.
You will get rich fast through leveraging, it is risky but if you will acquire leveraging skills. Getting rich will be so easy for you. So how does leverage work? It simply means you are using other people’s money or other people’s time. Instead of using your own money you are borrowing money from anyone else, maybe from the bank or other financial institutions. Your borrowed money can be placed in an investment vehicle, wherein, you are gaining profits higher than the loan interest.
Example: You borrow $100,000 in the bank that has an interest of $7,000 per month and your investment is earning $10,000 per month. It means you are making an extra $3,000 per month. That’s just a simple explanation! You can do this in real estate, business enterprises, but in stocks, I think it is more risky because a stock can’t help you to make a profit of 10% per month. Unless you are an expert!
3. Double your investment amount!
After you have calculated your target earning asset, you should follow it. Assuming your required monthly investment is $1,000 to acquire your target earning asset in 30 years. To retire instead after 30 years, make it only 15 years. Therefore, instead of investing $1,000 per month, you should invest $2,000 per month.
4. Compound Your Investments.
Let your investments doubled in just few years. If you are planning to have $1,000,000 and you borrowed money in the bank worth $500,000. Do everything you can to make it double or a make a profit of 100%. I discussed the ways to double your money in this blog in my previous posts. Just follow the rule of 72, which means if you want to double your money in 5 years (formula 72/5), your investments should earn at least 14.4 every year within 5 years.
Consult with a Certified Financial Planner
You heard investments in the television, radio or you have read investing from the books or blog like InvestmentTotal.com, but, did you take action? If you are serious about retirement, invest your money today.
You need to consult a certified financial planner about your investing needs and financial goal. While you are consulting with a certified financial advisor, tell your plan that you want to retire when you hit the age 50, or below.
Financial Tips & Warnings
It is great and wonderful to retire young and rich, however, you should be very careful in making an investment decision.
Equip your mind with investing skills and financial intelligence, be courageous in taking risks but learn to manage risks, learn to play the money game to win in any investment vehicle such as stocks, mutual funds, real estate, business and entrepreneurship whether it has/in a bad or good market.