The captioned subject leads us to think about various aspects to attain first financial independence that too as early as possible and then subsequently retire.
Financial Independence can be attained through careful investments and accumulating all income and assets. Different modes of investments are as follows:
One must have investments to compensate the inflationary effect to his savings and assets. Investment plan to be selected keeping in mind various aspects such as –
Risk Profile – ULIP is advisable for young customers and traditional endowment or money back plan is best suited for conservative investor.
ULIP (Unit Linked Insurance Plans) gives the investor tax benefits, marked linked returns and insurance coverage.
Traditional Endowment plans give guaranteed maturity benefits along with bonus equivalent to fixed deposit and insurance risk
Money back Plans give periodic cash payouts to investors and help build regular large capsules of fund.
Child Plans are saving instruments help parents build a protected asset for their child’s future and also provide many insurance features.
Other Investment Plans:
Mutual Funds – These are professionally managed trusts where investors money is pooled and invested in different financial instruments such as shares, securities etc. The research and other precautions are done at the level of the Trust and the individual investor need not have to do the same and it is safe also in that angle.
Gold – Investment in gold makes a good investment as the value of gold has been appreciating for the last few years more than 22% annualized returns. For investing in gold, there are various methods which include physical gold, e-gold and gold ETF.
PPF, Bank Fixed Deposits and Postal Schemes: These 3 options are most suitable for making safe investments. The interest rate on PPF account is presently at 8.8% per annum and keeps changing every year; different banks offer different interest rates. There are also many postal investment schemes which can be bought.
It is very important that following things to be kept in mind while making the insurance plan:
Invest in both short and long term plans gradually.
To keep a balance between risk returns
Invest in both liquid and fixed
To do research before investing
To review portfolio yearly and make necessary changes, if needed
Avoid over exposure to single market instrument
After making sufficient investment that can take care of your retirement, plant the time of retirement whether early or usual. Important aspect is to ascertain the quantity of your accumulated income that is derived from the total investment that can take care of your retirement life.
In the present world with the advancement of medical facilities the life span of human beings increased tremendously. In view of the above, it is absolutely necessary to keep sufficient money that will take care of the retired life of the person.
Plan the time of retirement
Once you have decided at a particular point in your life you want to be financially independent, you need to make effort to get there.
The first step is to figure out how much you will need to live on. Start by seeing how much you are spending now.
Try to anticipate future expenses. You may discover you will need more money than you think to become financially independent.
It is to be kept in mind that though you have accumulated sufficient money and took decision to retire at a particular time; the important aspect is the way of spending your life savings for the rest of your life. Spend it for your real expenses and not for the purpose of spending.