Tuesday, March 05, 2013

Saving Money for Retirement

Came across this simple article about saving for retirement. Well for most employed people, the only option to have a comfortable amount stashed for retirement is to save, save, save! Even for a homebiz entrepreneur, saving is indeed a must too. However it would also affect your cash flow. When you put away a portion of your earnings, you are reducing that portion from working in your business.

On the other hand, if you don't put away some sum, you may not have enough when it is time to call it quits. And yet, just putting away money into your bank account is still not enough especially since there is inflationary pressure on every cost of living, you would find your purchasing power shrinking and when you retire, the money that you saved did not quite meet up to the future cost of living.

Anyway, the simple article here stressed the need to plan for retirement and to have prudent spending on your current earning. This may be easier said that done as there are dependents. You may have a family needs to take care, child education to plan, and it would seem there can never be enough leftover for savings.

And of course there would be the latest fashion and gadgets out in the market, and you may just want to reward yourself with a splurge every now and then. Self gratification first or put aside for another rainy day? You decide! Once can't live forever too, and yet you may live for a long time to come.

The key would be to balance the necessary needs and some wants (well being happy is good, but you may need to keep some of those happiness for the future too!) and sort out your life priorities.

What is your financial stamina and how do you improve it?

Financial Snacks - by Amelia Hong
Monday March 4, 2013

Imagine that you are retired. But are you aware that you may retire for as long as 30 years, especially since life expectancy keeps going up? So before you retire, you are working hard to earn as much money as you can, but time is running out. What else can you do to build your financial stamina in order to last the long haul? AMELIA HONG writes.

SAVINGS ADD UP: No matter how much you earn, save a little of it. Start as little as 5% and keep moving up. No one is too broke to save because it is a matter of your mind-set and nothing is too difficult to trim.

Make this a real effort for the first 10 years of your money making life because doing this early makes "time" and "returns" your financial buddies.

If you put in RM1,000 every month when you are 25 until 55 at a return of 8% per annum, you will accumulate a whopping RM1.4mil. Delaying this 10 years later, you need to double the effort to setting aside RM2,500 each month to get to the same finish line.

SPENDING WITH THOUGHT: Know the difference between wants and needs. Always ask yourself, "Do I really need this?" Giving up an expensive car now may mean that you have an extra half a million in your pocket 20 years later. Also, take note of the true cost of owning something because maintaining the item bumps up the cost. An example will be an expensive membership with a high annual fee requirement.

STAY AWAY FROM BAD DEBT: Credit card debt of 18% p.a. is going to double your debt in four years. A debt of RM40,000 will take 10 years and seven months to clear if only the minimum was paid and a total of RM16,912 in interests. Imagine what you can do with the interests instead - a holiday for two, a deposit for a new car, a start-up capital for a business or simply an injection into your retirement portfolio.

Will you finish the financial race with a medal? Strengthen your financial stamina with these three simple financial habits. Think about it. -- The Star Biz.

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