| Eight hints for retiring early It’s still possible to retire early if you start planning early and stick to the task. If you really want it you can do it. At least being in the financial position to retire early does give you a lot more options. These days though the chances of retiring while still a member of the fitness club rather than the bowling club are pretty slim. Or are they? A number of financial experts suggest that an early retirement is possible. 1.Start early, maintain discipline, budget wisely It sounds pretty simple, but, it’s all about setting goals early and being disciplined. It’s not just about saving money, but about investing money in growth assets like shares and property, rather than in lifestyle assets such as luxury cars and extravagant holidays. 2. Matching goals to reality While discipline is crucial, goal-setting is also important. To retire early, you have to work out realistic lifestyle goals now and when you retire. 3. You need cash flow People who achieve reasonable cash flow and invest wisely are more likely to retire early. A well-paid job in the right industry or your own small business will help your cause, especially if you get your "foot in the door" early. 4. More risk equals better returns To get better investment returns, you must be prepared to take more risk. Starting early and sticking to your investment strategy, you have the potential to create significant wealth and retire early. And if it goes wrong, you’ll still be young enough to start over. Determine your risk “comfort levels” and invest accordingly. 5. Taking a direct approach Those who retire early tend to take a "Do It Yourself" approach rather than relying on managed investment vehicles for building wealth. Many early retirees might have built their wealth through a successful career or business.Those are individuals who are used to having "hands on" and aren’t comfortable with somebody else managing their money. They will only outsource the management of their money if they don’t have easy access to a particular investment. 6. Gearing Gearing is a common strategy for investors who don’t have the funds to buy an investment outright, yet want to access the long-term rewards offered by quality assets like shares, property, or even artworks. By combining borrowed funds with your own money, you are better positioned to reach your financial goals – and reach them faster. But be warned, gearing involves risk, and the higher the gearing, the higher the risk. 7. How the tax system can help While gearing is becoming more popular, understanding the tax implications of an investment are also very important. Borrowing money for an investment that is not producing the returns you need after tax has been deducted, will cause you to become unstuck. 8. Super as a safety net It is suggested that if your other strategies don’t work, making extra super contributions can provide a “buffer zone”. However, it’s not necessarily the best strategy if you’re planning an early retirement. Preservation age is currently 55, but will gradually increase to 60 by 2015. |
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