Preparing your finances for retirement is the most important aspect of financial planning. Yet, not everyone prepares their finances to ensure that they will have enough money to retire with a comfortable living standard and some extra money to enjoy life (eg. traveling, buying a new car etc.).
The key to financial planning for retirement is starting now. This is because of the power of compounding. Your initial investment earns a return and this return earns a return and so forth. As a basic rule of thumb, your money will double itself every 72 periods that it is compounded (see Rule of 72). If you haven't already done so, consult a financial planner to discuss your retirement needs.
Financial planning is about balance. You need to weight up your needs and want of today, with your needs and wants of tomorrow. Therefore, you may need to restrict you current lifestyle in order to fund your retirement. This does not mean "going without" or not enjoying life, but the more money you put towards retirement now, means a considerably large amount more money you will have to enjoy when you decide to retire.
A great way to save for retirement is through using a 401k. A 401k plan is a retirement plan into which employees that work for a private company make contributions of pre-tax income into a company fund that invests in a range of assests - including stocks, real estate, bonds, mutual funds and cash.
You retirement planning strategy will depend on your stage in life. If you are about to enter retirement, then you will more than likely have a investment portfolio that consists of a balance of high-risk, fast growth investments and income producing assests (like investment properties). Having said that, if you already have a solid nest egg ready for you when you retire, you will have no need to chase quick growth. You should look for long-term value like "blue chip" stocks that have a strong dividend yield.
Once you enter retirement and stop earning an income from working, you can then look seriously at acquiring solid income producing assests without the fear of paying too much income tax (since you no longer have a job).
There is a range of options and strategies to help you optimize your investment porfolio. The key is financial planning strategies.
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