Age 40 does not have to be scary, but you are at a critical age that requires you to save at least 40% of your income, from your salary or business, and if you have any dividends that come from shares.
If you are unable to save 40% of your current income, then you need to create a second or third source of income to support what you currently earn, so you are able to save and invest a portion of your earnings and prepare for a soft retirement.
A soft retirement affords you the kind of life you would like to live without depending on your children, relatives, or anyone.
Once you hit age 40. Your Investment Time Horizon [ITH] will be lesser than when you were 25 or 30 years.
Learn quickly about your investment time horizon. If you are above 50, that means your time horizon will be lower than someone who is less than 50. If you fully understand this, you can then make your savings and investment goals around it and make a workable plan.
Let me show you how to calculate your Investment Time Horizon. On one side, place your age as of today; on the opposite end, identify your target age when you hope to achieve your most distant investing goal: (for many people, this is retirement). The intervening years between these two ages is the time horizon you have for that future target.
PLEASE NOTE:- If you’re owing anyone, you need to re-calculate your Investment Time Horizon to accommodate the number of years it will take you to pay back the debt/loan.
In simple terms, investment time horizon means the time one has left to save or invest before one retires. If you’re over 50 and you have not started planning to retire wealthy, then you need to start now.
Retirement does not always turn out the way people think it should because many people live in denial that the future is automatically secured. While some are still trying to figure out what they need to do to retire comfortably and it sometimes takes a long time for others to align with their new state of life; which may be altered by the death of a spouse, mortgage payment, change in eating habits, change in living condition, education for grandchildren and a whole lot more.
Retirement planning starts with thinking about your retirement goals and how long you have to meet them. Never push planning for retirement to a later date.
Start planning for retirement as soon as you can to take advantage of the power of compounding interest. Younger investors can take more risks with their investments, while investors closer to retirement should be more conservative.
In general, the older you get, the more your portfolio should be focused on income and the preservation of your money. At this stage, you should be investing in less risky investments which may give you less proceed or dividends but will be less volatile and provide income that you can use to live on and less concern about inflation.
We started a savings challenge in January, now we are in February, this shows that slowly but surely we shall get there. You can still join us as we meet our goals in every little way we can.
Because you think your time is far spent, there is that tendency for you to feel under pressure to make up for the lost time. Please don’t fall into that pressure trap, at the same time, stop the procrastination and start now.
As the popular saying goes, when you wake up is your morning. Remember this is your journey, not anyone else.
Don’t compare yourself with anyone. Start planning now and don’t procrastinate. At the Women, Wealth, and Wills Network, we already have a structure in place. You only need to plug in and we will guide you all the way.
As we vote for our preferred candidate today, let’s vote wisely. The future of our children depends on this.
Have a blissful weekend.
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