Retirement planning is something that every American should do. It can be exciting or very scary. Some people want to retire when they are 65 and some people will retire when they are 35. Whether you want to sooner or later, it is recommended that you should follow 5 steps to achieve early retirement.
- Don’t get ahead of yourself.
When planning for retirement you need to make sure that you aren’t investing all of your money, but that you are saving a lot too. You need to “earn the right” to invest. This can be done by getting a solid job and saving before you invest. You want to be prepared for the dips in the housing and investment markets.
2. Increase how much you invest gradually.
Consider investing more money next time you get a raise instead of leveling up your lifestyle. As humans, we can suffer from what’s called lifestyle inflation. When you get a nicer house, car, or phone, it is always impossible for us to go back. Be careful about what you do with that extra money when you earn it. Live beneath your means so you can invest and save the difference. Although this is so simple, most Americans don’t do it.
3. Try a Robo-Advisor.
Investing can be complicated. When you get what’s called a “robo-advisor”. An example would be the Robinhood or Acorns apps. These tools make it easy for anyone to invest. Now of days we don’t have any excuses not to invest! It’s easy as watching a video or downloading an app and signing up with our online bank. Back before my generation, people have to go to a physical location to invest like the New York Stock Exchange. Back then investing was pretty much a privileged of the upper class. Now, investing can be for anyone no matter how poor you are. If you have a phone, a plan, and a little bit of extra money saved up, you can invest too!
4. You can Invest on your own.
Once you become comfortable investing, you will be able to invest on your own and learn more about the markets. Although there are a lot of people out there that will give you good advice (that you should listen to) it never hurts to be able to invest on your own. Having a basic knowledge of investments can go a long way when you are in the driver’s seat.
5. Don’t panic.
Want to know how to fail at investing? Panic. When markets dip, don’t ever sell, in fact you should be buying. You never lose investments until you sell. If the markets are low, don’t think of yourself as losing money, think of yourself as buying stocks at a discount.
When you invest you absolutely (in my opinion) have to be in it for the long game. If you think that you are going to get rich quick (some people have) then you are going to need a lot of luck or money that you can afford to lose. If you aren’t investing for the long haul then you are probably gambling.
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