The popular Hindi movie ‘Zindagi Na Milegi Dobara’ introduced the exotic locales of Spain to a lot of Indians. And in addition to all the singing, dancing and running from the bulls, the movie also spoke of a very interesting concept: early retirement. During the movie, one of the key characters, essayed by Hrithik Roshan, talks about his ambition to earn as much money as possible and retire by the age of 40!
This might sound unreal but a lot of Indians are actually pursuing the goal of early retirement. In this article, let’s discuss how you can actually make this dream come true.
- Maximize your savings
There is one major difference between a regular retirement plan and an early retirement plan: Time. In an early retirement plan, you have less time to create a corpus. And if you wish to reach your financial goal, you need to maximize your savings.
This may surprise you but the foundation of a good early retirement plan is built on large savings. You need to put away as much money as you can into your piggy bank. This is because the more you save, the more you can invest.
- Start investing
There is a popular saying: The best time to start investing money is twenty years ago. The next best time is now. This statement is very relevant for people who wish to retire early. In order to live comfortably during your retired years, you need to have a large corpus of money to manage your expenses.
In addition to your regular expenditure, you may want to do stuff like travel around the world, pick up new hobbies (painting, scuba diving, music). All of these activities are expensive.
By investing in equity-oriented investments, it is possible to achieve high returns over a pmueriod of time. Invest in stocks and mutual funds based on your financial goals and requirements. Investing through a Systematic Investment Plan (SIP) is one of the best ways to achieve long-term returns. When you invest through SIPs, you don’t need to worry about timing the market or beating the market. Invest a specific amount of money regularly and you can achieve your goals on time. And since retirement planning is a long-term financial goal, it can be helpful to discuss with a portfolio manager to identify the best course of action, depending on your risk profile and investment capabilities.
- Increase your leverage
Since you wish to retire early, time is of utmost essence. And the best way to maximize your returns is to increase your leverage. This means you replace the limited time available with more resources. This way, you can earn greater returns in a smaller amount of time. For example, by investing in real estate, you can create a larger amount of wealth in a smaller amount of time. Do a bit of research and buy a value-priced property. When the right time comes, you can sell the property at a much higher rate and rake in the returns.
- Take advantage of tax-savings plans
Tax planning might sound like a chore but then again, no pain, no gain. There are many different avenues under the Indian tax code that allow you to save a substantial amount of money through tax deductions, rebates and exemptions. All you need to do is identify which sections are applicable for you and make use of them. For example, did you know that you can avail tax deductions on charitable donations under Section 80G? Take advantage of tax options and channel these savings into good investments.
To sum up
Early retirement is a choice, whether you wish to retire at 40, 50 or 55. But this choice comes with a lot of responsibility. You need to have the financial backup to ensure you can maintain your standard of living for a long time. Explore the above options to maximize your returns in the short time period available. And as you lounge on the beach with a drink in your hand, you will be happy that your hard work paid off.