Retire Early:Kyunki Shubh kaam mein deri kaisi

For most people, life is like clockwork. You get up in the morning, do your morning chores, push off to the office, work all day, trek back home in the evening, spend a few fleeting moments with your family, and crash. And then again repeat the same the next day and the day after and so on. Which is why many people these days have started dreaming about an early retirement.

But the catch is that retirement no longer means hanging your boots and simply relaxing. Instead, retirement is now increasingly being viewed as another exciting phase of life. A time when you can slow down and actually enjoy life, pursue the hobbies that you have always wanted to or start your own little entrepreneurial venture. In any of the cases, there is a high chance that your income would decrease significantly if not almost disappear. This means that you have to make plans to substitute your income from salary with other sources of income. After all, the whole point of retiring early is to reduce the stress in your life and follow your dreams. Achieving that would definitely be challenging if you don’t plan your finances right and have the right retirement investment.

Start retirement planning early for an early retirement

Here is a step by step guide on how you can start your retirement investment and pursue the next phase of your life with gusto.

• Step 1: Determine the ‘gap’.You have certain needs and requirements along with a standard of living that you would like to maintain even after you quit your job and take an early retirement. At the same time, your income from salary will definitely disappear. This will create a gap between what you ‘have’ and what you ‘need’. You need to determine this gap.
• Step 2: Don’t forget to take inflation into account.When you are determining the gap, you must take inflation into consideration while calculating the value of your future needs. For example, assume that currently your expenses on essentials amount to INR 40,000 per month. However, with the cost of living constantly increasing, the things which cost INR 40,000 today are likely to cost more in the future. So, you take into consideration the average rate of inflation and increase the average amount accordingly.
• Step 3: Next, you create a retirement investment plan that can help you bridge this gap in the future.The investment plan should be in line with your risk profile, return requirement, and investment time period. More importantly, it needs to be flexible so that it can adjust to both the changing market environment as well as to changes in your risk-return objectives.

Retirement funds: The easy way to retire early

If you make a robust retirement investment plan, then you can easily take an early retirement and live the life of your dreams. On the other hand, if creating such a plan and sticking to it seems like a challenging task, then you could simply opt toinvest in a retirement planoffered by select mutual funds. Such funds usually invest your money as per a predefined asset allocation across equity and debt instruments. As your comfort with risk changes, the plan gradually shifts your portfolio investments from high-risk instruments (equity) to relatively low-risk instruments (debt). This way you are able to benefit from the growth potential of equities in your prime earning years and then protect your portfolio throughdebt investments, as you approach your retirement. There are two main benefits of investing through retirement funds:

• Most of the heavy lifting in terms of determining asset allocation and then investing accordingly is done by the fund manager. Thus, your retirement investment is carefully managed by experts.
• You can invest in such funds via theSystematic Investment Plan (SIP)This means that you can both start early as well as small with fixed periodic investments that can help you reach your retirement goals.

The bottom line is that “You Only Live Once’ and you should not let a lack of planning get in the way of achieving your goals, whether they are something as simple as buying a car or retiring early to start your own organic products business!

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