If you want to create a proper retirement plan, you must start doing it from now. The best retirement plan is available if you have the right attitude and determination.
Begin saving up and investing your money in the right way. Doing so can help you create a future you could only have dreamed of.
With that said, below are some tips regarding financial planning and investing – two major components of retirement planning.
The Key Elements of Financial Planning
Plan Your Budget and Cash Flow
It would be best if you started learning how to budget your finances to have the best retirement plan. You also have to get a sense of your monthly cash flow. These steps are two of the best financial planning methods you could ever do.
The most common budgeting principle you can apply to your finances is the 50/30/20 rule. It means that 50 per cent of your income should go to your necessities and needs, 30 per cent of your income should go to your wants, and 20 per cent of your income should go to your savings and debt repayment.
You can start by listing and tracking all of your expenses to get a better sense of your cash flow, especially the important ones, such as bills and debt payments. Having a visual aid helps identify the critical areas of your cash flow. You can now start creating immediate, medium and long-term financial plans by seeing where your money goes.
Prioritise Your Income and Cash Reserve
One of the most effective ways to have the best retirement plan is to save up. Ask yourself this question, “How can I funnel my income into a cash reserve?” Having a secure income and a cash reserve can help you create a stable future.
Your income can come from any source. It can be your salary from work, the profit you earn from a business, the money you receive from tax benefits, allowances, and investments. It would help if you used your income to pay for your expenses and put away the rest for your savings.
As for your savings, you ideally should have at least $5,000 to $10,000 in your savings account for unexpected expenses, i.e. emergencies. Ideally, you can put your savings in a cash management account because it has higher-level security and pays a higher interest.
The Principles of Investing
Be Wise in Investing
You should plan your finances wisely. Start investing your money to help grow your funds and receive additional income through distributions to make the most out of it. It will help if you spread it across a range of investments and assets, such as various stocks in a share portfolio and property – this is known as diversifying your portfolio.
If you are creating your best retirement plan, you need to make the right choices in investment. The best financial advice anyone can give you is to be careful where you put your money. You should only place your money in investments with a proven track record and good reputation and management.
It would be best to always conduct your due diligence ad research before making any big decisions such as this. Always consult a financial planner if you have any questions or reservations about making an investment or purchasing an asset.
Consider the Other Factors
Time is essential. That is why it is crucial to match your investments according to your ideal timeframe. Since you are doing retirement planning, it is best to seek long-term investments for your future.
With your future in mind, you also have to factor in the risk involved in investing. If you want to put your money in investments with reasonably low-risk in terms of a possible capital loss, you should also expect to get lower rates in return.
Choosing the option with the least risks is not automatically the best answer. Factors such as inflation and tax can immediately erode the value of your investments, especially if you don’t organise your portfolio correctly. Always ask your financial planner for the right investment advice to make the most out of your decisions.
Ready to Plan?
Everything about planning for retirement is connected to how you organise your finances properly. You need to have emergency funds, a cash reserve, budget, and an investment portfolio. All of these can help you get a sense of your retirement plan and how you can create it.
You may want to consider working with a financial planner from the Central Coast to get expert guidance on retirement planning. Central Coast Financial Planning Group are a financial planning firm dedicated to helping clients retire with confidence and peace of mind. Book your complimentary first meeting today!
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.