When we are in our twenties and stepping into our first jobs, we dream of a big house and foreign vacations, however, we hardly ponder upon the idea of retirement. The zeal to pursue and earn is so high that the idea of managing our finances often slips our minds. Fast forward to when we are 40, going through a mid-life crisis and regretting not having to start saving early.
It is easier to save for retirement when you are younger and have lesser responsibilities. Just investing a little money at an early age can help you retire earlier than you expected. And who does not want an easy retirement?
Akhilesh Gupta, Chief Investment Officer, Aviva India has suggested ways to start sooner and retire better.
Steps to create a robust retirement plan in your 20s:
- Financial Literacy
To make meaningful investments, you should have enough knowledge about them. The first step to achieving this is to read and talk about money. For a step towards being financially literate for a better future, it is of utmost importance to start exploring and understanding the financial jargon and the procedures from an early age.
- Budget and Save
To understand the nature and pattern of the spending, you must track your expenses. This could be achieved through budgeting. Once you have budgeted, if you invest a portion of your pay regularly, you will know exactly how much money you have left for other expenses. This will help you in becoming financially disciplined.
- Compound Your Money
Once you have gained financial knowledge, you will realize the power of compounding. Compound interest is the interest on a balance that is reinvested, as a result, you earn more interest. It is the money-multiplier formula. If you start saving early, you give your money time to grow and compound.
- Invest in SIP and ULIPs
