We all have our promises to ourselves that we will do something to make us better, especially during this time of the year, when hope abounds and freshness is still in the air. So while we have you in an upbeat mood, let us take a closer look at your real financial situation. Let us consider a baseline situation where you need to be able to retire at a reasonable age in a lifestyle you can live with.
In the United States, where there seems to be much more data and research available, the common amount experts agree upon to retire is at $50,000 per annum, in comparison, the average wage rate in the US is about $47,000 per annum, which is close to a 1:1 ratio. Of course, the situation would be somewhat different here and for different people.
At this point, it should be obvious that you would need lots and lots of money to be able to retire, and the big question is, do you have that kind of money? Of course, the bigger question is, where and how do you get this kind of money? If winning the lottery is out of the question and this is a reasonable assumption to make, we need to explore other possibilities.
To even make a dent in setting up your retirement fund, you need to save as much as you can from what you are earning. Even in a situation where you can save half of what you are earning and on a simplistic assumption of constant values, you would need to work for 50 years just to save enough to live for the next 25 years. Obviously, this would not be your best option.
The first step is to build up enough savings, so that you can have some capital to invest. Investing in time deposits and money-market placements is often not enough even just to cover inflation.
While many people have made tons of money in the equities market, many people have also lost their life savings. You need to have the timing right, buying when it is low and selling high, of course.
This tends to be very tricky and requires a lot of luck. However, there are a number of investments that have worked out really well for me, such as going into business and investing in real estate.
Even when I was in school, I would go into trading, which is buying something and selling it at a higher price. I did this for everything, from cars to coins and club shares. I enjoyed what I was doing, too. As I got older, I was able to invest in properties, some of which had appreciated by more than 30 times in 30 years, and still continue to appreciate.
Depending on your stage of financial capability, you need to have a long-term view of your finances. If you are still building up capital, ensure that you spend your money wisely and distinguish between a need and a want. The more you are able to stick to just spending on needs, the quicker you can move on to the next level, which is to make investments.
For people who already have money to invest, it would be great to invest in something that actually provides you with a rate of return, such as a rental property. It would also be good to invest in something that you need and still appreciate over time, such as a condo or house.
We all need to live somewhere so, rather than paying rent, own the property and benefit from the appreciation, assuming you choose well.
The same can be said for investing in certain country-club shares that not only gave you a great return on your investment but also allowed you to enjoy their use and enabled you to network to advance your career or business.
Now, if you really want to make a big bet on yourself, become an entrepreneur.
Find a business that you are good at, and enjoy what you are doing. It will require a lot of nerve, since you are stepping out of our comfort zone, but with the right planning and preparation, you can limit your downside and increase your chances of success!
Comments may be sent to georgechuaph@yahoo.com