If You Don’t Invest Your Money Now, You’ll Hate Yourself Later

Are you just happy watching all the money you have earned go up in smoke, as you yourself bask in comforts? Or, are you just happy to watch your money piled up in front of you?

Nobody with a practical mind would answer ‘yes’ to these questions.  Everybody wants their money to grow, and that is where investing comes in.  It is just like planting a tree and watching it grow. You plant a little seed out of your earnings in the fertile soil of investment options, and watch it grow.

Investment is like planting a tree and watching it grow.

If you do not invest now, you may find it difficult to live a comfortable life after retirement. This article will help you to understand what investment is and how good investments help you to retire comfortably later in life.

What is Investing?

In a nutshell, investing is your effort to make your money grow. It is an opportunity to make more money from the money you have in hand. It is also a way of saving your money for something further ahead in the future.

The increase in money could be by way of interest: someone is willing to pay interest to use your money for the time being. The increase could also be because an asset we purchased increases in value over time.

Some of the numerous investment options include company stocks, fixed deposits, bonds and mutual funds, to name a few.

Why Should You Invest Your Money?

The value of money changes over time. This is the reason why it is always preferred to have money sooner than later. “Time value of money” is the name given to this concept.

A rupee now is worth more than a rupee in the future. This is because a rupee now can accrue a certain value through interest or other appreciation over a period until when the rupee in future is received.

The value of money gradually decreases due to inflation. The money that is accruing value at a slower rate than the rate of inflation becomes worth less as time goes on.

Therefore, the expenses in your life may not be the same 20 or 30 years down the road. It may be 2-3 times that you need now. For that reason, your investment has to provide the adequate income you need to carry on with your life. This makes retirement planning very important.

Invest Today and Retire Comfortably

What we must realize is that when we invest we are securing our future and preparing our lives after retirement. So that when you retire you are independent, carefree, and live your life on your terms.

Retirement planning at an early stage of your career helps you to avoid a dramatic change in your lifestyles after retirement. It also provides financial protection to you and your dependents throughout your life and after.

Therefore, the time to think about your retirement is now when you are young and dynamic. Start investing today and make that money grow.

How to Plan Your Retirement?

First you must decide the age at which you wish to retire. You must consider the maximum amount of potential expenses then and the annual income you might need to meet those expenses.

The practical side of retirement planning will be to save a small amount of your current income as retirement savings. Plan carefully so as not to take wrong decision. For example, if you have set your retirement income in a manner that is too low, you might run out of all your money before your life ends. In case you set a very high goal, you might postpone your retirement quite unnecessarily.

The wise way is to do your arithmetic to calculate the amount of money you need to meet all your needs. In this way you can be happy and contented all through your retirement years.

Calculating Your Retirement Income

If you want to maintain the same standard of living you are used to before retirement, you will need a retirement income somewhere between 70 to 100% of your salary, immediately before your retirement. This is called replacement ratio method of deciding your retirement income. However, this ratio might not be right in the case of everyone.

Instead of relying on the replacement ratio, you can calculate the income you need by using an online retirement calculator. Online calculators can examine in detail your living expenses for your future, ways to reduce your living expenses or suggest the possible age for your retirement.

Yet another way to calculate your retirement income is to divide the retirement period into two: The early part and the later part. During the early part of your retirement, you tend to be more active and so spend more money.

In the later part, you are less active and so spend less money. However, you need to project higher expenses for the later period because you might need medical as well as long-term care.

In addition to all of these above, you have factor in the results of inflation in expenses. It can increase the living expenses as you become aged.

Thus, it’s very clear that wise investments early on in life help you later in life. If you ignore this you will end up having a miserable retirement life. When you become old, your savings is all you have to live your life. Without any plan for such a life will make you hate yourself later.

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