1. Economical expenses…
Avoid unnecessary expenses as much as possible. Rather than owning an item and spending lakhs of rupees, you should rent it for a few thousand and see if you can use it. For example, if you only use the car on weekends or once every 15, 20 days or once a month, renting a car is more profitable than buying your own car, that too on loan, and will definitely help you add more savings for early retirement.
If you absolutely need a car, you can buy a cheap used car in good condition. Using public transport as much as possible is good for health and money when living in a city with good transport links.
2. Reduce lifestyle expenses…
Lifestyle expenses such as going out once a week, eating at hotels, going to the cinema, and visiting the city frequently should be reduced. Don’t use credit cards for rewards points and discounts to buy things you don’t need.
3. Avoid luxury expenses…
If you are a businessman, you can own a small car as needed. Avoid luxury car. Similarly, instead of smart phones worth lakhs of rupees, you should get used to using other mid-priced phones with the same features.
4. Invest up to 75% of salary…
Generally, we have seen that 10% – 30% of salary/income should be invested for retirement. But if you are planning to retire early, around 50% – 75% should be savings and investments.
If a person saves 10% of his income, if he works for 9 years, he will save one year’s worth of retirement expenses.
This means if he saves 25%, he will save one year of retirement expenses if he works for 3 years.
This is because he saves 50%, so if he works for one year, he will have saved one year’s worth of retirement expenses.
Since this is 75% of his savings, he would have saved a year’s worth of retirement expenses if he worked for four months. That is, the more we save in salary / income, the sooner we can retire.
Saving 75% will be difficult when there are house rent / home loan installments, food expenses, children’s education expenses. It is necessary to have such a high salary. We have already seen that it is important to raise the qualification for that. See if you can do part-time work/business if possible. Family members can also increase the family’s income by doing part-time work as much as they can.
5. Continuous investment is very important…
It is very important to continue the investments without stopping in between. In short, save more; Spend less; Invest wisely.
A smart investment…
Smart investment here means traditional investments like FDs, endowment insurance policies, gold jewelery and real estate investments and modern investments like equity investments (company shares, equity mutual funds), digital gold (RBI Gold Bond, Investing in real estate investment trust (REIT – Real Estate Investment Trust) such as Gold ETF, Gold Savings Mutual Fund, or REIT can help you add more retirement savings at a young age. These modern investments will help you to accumulate more funds quickly as they generate higher returns than the rate of inflation and incur less income tax.
As salary and income increase, it is imperative to always follow the habit of increasing savings without increasing expenditure.
(Planning to be continued)