In a country like India with a population of more than 147 crores, financial freedom is a dream of many. Still, the path to accomplishing this dream is not easy. It comes with a lot of caveats, sacrifices in early years and long-term strategic thinking.
In case you are around 35 and aspire to retire with peace of mind and comfort by 60, this is the opportune time for you to act and effectively plan your investment in a sensible manner over the next 25 years or so.
Keeping this in mind, here are 7 actionable steps you can take to achieve your desired objectives and ensure you can provide your family with a meaningful lifestyle going forward.
Start by clarifying the lifestyle you aspire to after What do you wish to see yourself, your family and children do in life once you turn 60? This makes developing a savings and investment plan indispensable.
once said, “Do not save what is left after spending, but spend what is left after saving.” This pragmatic approach of saving first before spending will go a long way toward helping you live a meaningful life and accomplish your desired objectives by the time you turn 60.
When you plan early, you give yourself ample time to rectify mistakes and fill gaps on your path towards . On the other hand, with a clear retirement plan, i.e., objectives, it becomes very difficult to quantify concepts of economics and add value to your life.
35 is the age when your earning potential peaks. This is the time for you to take a stock of your current assets, liabilities, monthly expenses and ongoing . Going through these fundamentals can help you calculate your retirement corpus. You can also utilise calculators provided on the websites of leading financial institutions and banks in the country to calculate a well-thought-out retirement plan.
This is also the time for you to continue building your personal finance knowledge and wisdom. described this once, stating, “Spend each day trying to be a little wiser than you were when you woke up.” This simply means listening to investment professionals, understanding your current financial status, and interacting with personal finance strategists to devise a winning strategy by learning from their life experiences.
This is the perfect age for you to have a clear understanding of different kinds of asset classes in the country that you can invest in to build generational wealth. Equities, cash and cash equivalents, commodities, and real estate, among others, are some of the major asset classes that you can look to invest in as per your risk-taking appetite and professional guidance, depending on your current financial health.
Once you understand these concepts, you can use this knowledge to leverage fixed income instruments such as Employees’ Provident Fund (EPF), Provident Fund (PF), Public Provident Fund (PPF), National Pension System (NPS) and along with other similar offerings to your advantage taking into account your tax liabilities, debt obligations and long-term targets.
When you diversify investments across mutual funds, equities and equity-linked savings schemes, it can help you accelerate your retirement corpus building over a period of time. This happens as a natural consequence of growth, as seen in an emerging economy like India.
Plan long-term retirement by sacrificing today and invest consistently using Systematic Investment Plans (SIPs). You can consider investing in prominent small-cap or flexi-cap mutual funds, as advised by your investment advisor. The plans you should opt for should be direct plans.
Elaborating on the principle of correct investing, Peter Lynch once said, “Know what you own, and know why you own it.” Equities can offer higher long-term returns if the national economy and company earnings continue to grow, whereas debt instruments provide stability.
The decision on equity allocation at 35 should be taken after proper due diligence and a clear understanding of basics such as market crashes, recessions, and the usual market volatility, which can be very difficult to navigate for conservative investors. Clarity on these concepts and exposure in line with your financial advisor’s guidance can help you grow your corpus by 60%.
Once you turn 35, your primary goal should be to drastically reduce your current debt and liabilities. Especially credit card-related debt and dues related to personal loan EMIs. This is important because such debt instruments can quickly compound your total liabilities and complicate your retirement planning.
This idea was explained perfectly by Albert Einstein when he stated that, “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
This simply means you should prevent your debt obligations from compounding and focus on helping your wealth compound so that, 25 years from now, you have enough money to keep yourself and your family safe.
There is no investment plan that can be complete without planning for the unforeseen and unexpected. This means that in the current environment, one should definitely plan to have good insurance coverage.
To keep yourself and your family’s finances safe, you should opt for term life insurance and , with adequate coverage to protect your peace of mind and savings. This is because any mistakes in this regard can complicate retirement planning and force you to spend your savings and investments that you wanted to keep for retirement today to meet unforeseen expenses such as medical costs, accidents or other similar issues.
There can even be a possibility of getting forced into unwanted personal loans or debt to meet immediate surgery or treatment obligations if a proper health plan is not there to keep you protected.
Life continuously changes and evolves. This means your strategy should also be refined to better meet your needs. To achieve this, you should re-analyse your retirement planning every year, make adjustments in case one asset class investment is underperforming, and as Buffett advises, “the best investment you can make is in yourself.” This means you should never give up on your learning attitude; try to imbibe good personal finance and debt-planning concepts by reading good books and gaining clarity on the fundamentals.
In conclusion, financial independence by 60 is achievable with early planning, disciplined savings, proper guidance from a certified financial advisor and smart investments. By starting at 35, you let compounding work its magic. Consistency, patience, and periodic evaluation will ensure your retirement is stress-free, secure, and fulfilling.
For all personal finance updates, visit .