I’m a strong believer of learning from other people’s experiences, successes and mistakes, so I’ve compiled a short list of advice from baby boomers that are entering retirement and are really financially prepared for that next phase in their lives. I wanted to share with you guys some of their tips on how you can reach that point too.
- Start saving early and save often — the power of starting early is huge, time is always going to be our most valuable and important asset, the more time we take saving will not only allow us to put aside more money, but with compounding interest, those extra years will make a big difference in our investment growth.
- Stay invested for the long term — we too often save for things that we want in the shorter term, and there is nothing wrong with that, you need to set short term goals too. But you have to remember that retirement savings is a long term investment, so use point #1 and stay in it for the long haul.
- Diversify — it’s something we’ve all heard, don’t put all of your eggs into one basket. This is a technique that you should use to manage risk, if you put 100% of your savings into one asset class, when a market downturn happens your entire portfolio will be affected. Diversify to minimize the impact of one asset class’ performance on your overall investment portfolio.
- Protect yourself — protecting yourself against the unexpected, whether it be market downturns or personal/health related emergency’s, this is critical to not allowing bumps in the road take you completely off track. Insurance is an essential tool to protect your other investments, you can look at insurance as an umbrella investment for your other assets.
So, whether your retirement plans are to travel the world, buy a home in another country, or just play golf every day, the bottom line is, you will need money to do whatever it is you want to do. Take these tips and apply them to your daily financial routine, and when your time comes, you will have the same problem as these baby boomers I talked to, only finding it hard to flip the switch from working/saving to relaxing/spending.