Having a proper retirement plan gives you the opportunity to receive income from different sources. It is one of the crucial aspects of attaining financial freedom. For accumulating funds for retirement, there are multiple financial instruments available in today’s time like mutual funds, the National Pension System (NPS), and PPF, among others.
Let’s discuss five important points to consider for financial freedom and a happy retirement:
1. Start investing now: It goes without saying that a person should start investing from the starting days of employment to reach financial freedom. Investing should never be an option; in fact, it should be an obligation. No matter how much a person earns, he or she should always take out a fraction of that amount and invest it for the future and retirement.
2. Power of compounding: The power of compounding works by growing an investment exponentially. Early investments lead to compounding returns as the value of money rises over a period of time, leading to a contribution towards the generation of wealth.
3. Debt-free: Prioritising to become debt-free is key to investment. It will lead to increased savings. Having outstanding debt for a long can act as a roadblock to achieving the target of financial freedom. Paying off not only brings peace of mind but also leads to greater savings.
4. Invest in equity: For retirement planning, investing a portion of money in equities can generate higher returns than other traditional investment options. Investing money in equities and mutual funds helps steadily build wealth, adding that investing in equities can also help beat inflationary pressure as they deliver a higher rate of return.
5. Dividend stocks: Investing in stocks that pay a good dividend on a regular basis can also multiply the overall return. The market is full of good dividend-paying stocks that pay good income regularly. In fact, investing in stocks that pay out dividends is considered a strategic way to ensure a reliable income and build wealth.
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