It’s a rule of life that as a person begins to age, their productivity reduces as their body becomes more prone to age-related illnesses. Understandably, the ultimate goal of any person is to make as much money as they can in their prime years when their body is relatively young and free of any illnesses.
There has been an upward trend across the globe wherein people choose to make money, reduce expenses and achieve goals by the time they turn 40. People want to do away with their home and mortgages, children’s education and marriages before they retire. When all the debt is paid, living a stress-free life becomes easy.
But what if you achieve all these goals and many more before you turn 40 years of age?
Does it mean that you can retire early if you’re done hitting all your goals?
Yes, and yes!
Retiring early before COVID
In the pre-COVID era, people who wished to retire early were pushed towards investing in equity. People with high earning capacity in their 20s were advised to cut back on unnecessary expenses and save money.
For instance, you could skip an international holiday, upgrade to the latest iPhone or choose to not buy a luxury sedan. You may not realise it at the moment. However, doing small bits like this can help you save a boat-load of money.
People invest their money in stocks and equity, in the hope that this would grow over a period of 10-20 years (or more) and become a huge chunk of money, one that would guarantee a happy, secure and stress-free retirement.
However, this rosy dream shattered for millions of people in the world with the coronavirus pandemic.
Stock markets across the globe plummeted so sharply; they have still not been able to recover. Financial pundits warn that a long road may lie ahead of us when it comes to global markets making corrections. This has translated into equity worth billions to be washed out. People who were sitting, counting on this money as their retirement fund have been shocked and frozen to death.
But fret not! Things might look like they are going downhill, but there is another way. You can still retire early with investing the right way, even during COVID times with these steps.
Manage your debts
With the global economy in shambles, you need to keep your debts in check if you want to retire early. And if you have been unfortunate enough to lose your job or suffer a pay cut, make sure that you do not take up any more loans.
To secure an early retirement, you need to be debt-free and financially independent. Try to keep your debts to zero. Your focus should be on how to pay off your incumbent debts and not take any new ones.
Retirement planning should be focused on increasing your wealth, which means you need to reduce your debt. In this way, you’ll enjoy your retirement stress-free without the weight of additional payments on your shoulders. Managing your debts may include reorganizing, restructuring, and paying them off early to avoid paying hefty interest rates. Once you’ve paid off your debts, it will be easier for you to build up your desired retirement nest egg.
Have a debt investment cushion ready
When another pandemic-like crisis knocks upon our door, you need to be hands-on ready. A debt investment cushion might help in this scenario which can help absorb all the losses incurred due to such a situation.
Of course, investing in equity is equally important, but make sure to invest in debt investment. Even if your capital is hit due to some reason, diversifying your investment will help absorb the potential shocks.
Double your investing
While this sounds good on paper, it is tough to achieve. Doubling your investments at the earliest is an excellent hack to retiring early, no matter what the circumstances are. However, to do so, you need to cut back on all frivolous and unnecessary expenses.
By all, I mean ALL. There are no luxury shopping sprees, there is no fine dining now and then, and there is no spa vacation. This is a hard choice that you have to make to secure your retired life. The choices that you make right now will shape your retirement.
Saving all this money will mean that you can invest all the saved money, which increases your retirement fund.
No one knew that coronavirus would happen to us one beautiful day. But now that it has happened, and there is no way to go back to the pre-COVID world, you need to re-work the way things in your life are going.
Since the time and the circumstance has changed, understand that you will need to realign your retirement goals. A stately home in the mountains may not be possible due to the setbacks that the coronavirus pandemic has bestowed upon us. The most practical solution would be to keep yourselves insured with health plans.
And this becomes even more important if you or your spouse had to take a pay cut. Rework your retirement goals and figure out what’s practically possible.
Add income sources
It is always advisable to add another income source. If you rely on your salary as the sole means of daily bread, it is time you thought radically. There is no need to do a long course and get a new gig. You could just make money freelancing depending on what your hobbies are. You could take short courses to expand your skill-set and get side-gigs that help you get in that much-needed cash.
There are a million things that you could do to retire early even in these times. The only trick is to keep investing, keep your debts low, and rework your goals. Talk to your financial advisor about retiring early using investment schemes that might align with your goals.
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About the Author
Shriya Garg is the founder of ContentNinja, who always happens to go back to her roots as a finance professional. Being good with numbers, she loves educating her team members on personal finance, investment, and other things they don’t teach at school.