Whether you’re a recent college grad, your career is going strong, or you have a young family, there are several reasons why you could be thinking of retiring early. Even saving a little can make a big difference as you can benefit from the power of compounding. With time, you may equally invest in a fund that can generate returns and fund your standards of living. In this article, we present ten things you can do to retire early.
- Develop Wise Saving Practices
If you want to position yourself for long-term financial success, you must develop the habit of saving. You can develop a good saving habit by making your lunch, creating a financial plan, and prioritising your needs first. Below, we provide strategies that will boost your savings and improve your retirement.
- Create a Good Financial Plan
Are you aware of the sources of your money? You may make changes and put aside more money for your retirement savings by keeping track of your daily, weekly, and monthly expenditures. Creating a good financial plan equally means investing carefully. For example, you may invest in the Defender Global ventures which returned 3.4% in Q4 2023 as they invest opportunistically in Technology, Artificial Intelligence, and Special Situations, with additions to Alphabet Inc (Google), Pershing Square Holdings Ltd, and Legacy Property– Orchard Hills.
- Prioritise Yourself
You won't even notice it's gone, so make sure to continue paying yourself first by contributing extra money to your retirement savings. You may find many apps that assist with budgeting. Most likely, your bank has online resources as well. More importantly, you should invest in a way that protects your disposable income and shields you against inflation. For example, having successfully exited their position in Legacy Property – Rouse Hill Heights at a ~24% return over 12 months, Defender Global Ventures was invited to invest in the next project from the Legacy Property Team.
- Save Frequently
After you've paid your bills for the month, do you have any "leftover" money? Instead of spending it, think about conserving that money. Additionally, as you receive raises at work, increase your savings. Start saving money for your child's education if you can. There are several college savings schemes to take into account, some of which may also have tax benefits. But why not consider what assets you want to invest in before choosing a fund? Several funds choose either equities or bonds, but Defender Global Ventures clearly illustrates where they invest so you know how to adjust your investment strategy to balance risk and returns.
- Increase Your Superannuation Contribution Gradually.
Consider increasing your superannuation contribution incrementally. The Superannuation Guarantee requires employers to contribute a minimum of 11% of your earnings into your superannuation account. However, aiming to contribute more can significantly boost your retirement savings.
Try to increase your personal contributions by 1% whenever you receive a salary increase. This can be done through salary sacrifice arrangements or after-tax contributions. Ultimately, you should aim to contribute around 15% of your income to your superannuation account to help ensure a comfortable retirement.
- Recognize Your Options
If you quit your job or change careers, you have the following choices for your superannuation:
- Keep the funds in the superannuation account of your previous employer.
- Transfer your superannuation balance to the fund of your new employer.
- Consolidate your superannuation into a personal superannuation fund of your choice.
When making this choice, consider consulting a financial advisor and tax professional, as there can be fees and tax implications associated with certain options. Recognise the importance of diversification. You have time to adjust to fluctuations in the market, so stay focused on your long-term objectives and investment goals.
- Keep Your Debts Under Control
Managing your debt is crucial for your financial well-being. High debt levels can drain your disposable income, making it difficult to afford future expenses and potentially harming your credit score.
This can hinder your ability to secure a mortgage for your first home or upgrade to a larger one. Focus on paying off your debt systematically to ensure better financial health and more opportunities in the future.
- Make Prudent Use of Credit
While credit cards offer convenience, it's essential to pay more than the minimum amount due each month to avoid high interest charges. If you carry multiple credit card balances, prioritise paying off the ones with the highest interest rates first. This strategy will help you reduce your overall debt more efficiently and save on interest costs.
- Stay Within Your Means
Be mindful of the size of the home you purchase, considering the high costs of childcare and other expenses. Evaluate all your options and choose a plan that fits comfortably within your budget.
Familiarise yourself with your health insurance policy to avoid unexpected costs. Distinguish between needs and wants, and cut out unnecessary spending. Staying within your means includes paying off student loans and high-interest credit card debt. Making extra loan payments can help you pay off debt faster, and you may also find refinancing opportunities to reduce your financial burden.
- Examine Your Life Insurance Needs
Considering life insurance is particularly important if you have young children, as the cost of providing for their basic needs, including daycare and education, increases every year. Life insurance can protect your assets and help your family maintain their standard of living in the event of your death. Speaking with a financial advisor can help you determine the best options for your situation.
Although retirement may seem distant, start saving now or find ways to increase your savings. Working with an investment expert can help you develop sound financial practices while you are still young. They can assist in creating a strategy to achieve your long-term financial goals and ensure you have the right mix of investments for retirement. Additionally, an investment fund can offer valuable insights into life insurance and other financial options that may be beneficial for you.
