Thanks to the power of compound interest, the earlier you start investing for your retirement the better. There are various types of investments you can opt for your retirement planning. Common investment instruments include shares, mutual funds, bonds, options, exchange-traded funds among others. However, if you are past your professional career and nearing retirement, you might be worried about the gaps (if any) in your retirement plan. Whether you do not have a pension plan or have started investing late, you are not alone. Many people start retirement planning when it is feasible to do so. If your financial planning did not involve a retirement plan, then the below 3 aspects can be a starting point to boost your investment plan for retirement.
Juggle Your Asset Allocation
This means you need to slightly boost your investment return without increasing your monthly investment. You ask how this is possible. This is possible when you bump your asset allocation in growth assets such as equity. However, this increases the risk in your portfolio. This means that you need to take a calculated risk by consulting a good advisor or doing some in-depth research. You can make a few choices such as investing in equity-oriented mutual funds and so on. Moreover, you can also increase the period of your investment plan by say 2 to 3 years. This will help you achieve your retirement target without adding any stress on your monthly investment.
Start Saving More
In scenarios such as job losses and pandemics, it is difficult to stay afloat. Your monthly earning gets either reduced or paused. Whether you are single, have financial responsibilities of your family or are nearing retirement age, saving more is a habit that always gives results. You can start by spending less on frivolous things such as high-end gadgets, food and beverages and automobiles. This will help you keep up your investment options and prevent a gap in your retirement kitty.
Get Rid of Forgotten Plans or Loss-Bearing Investments
You need to look at your portfolio and get rid of investments that give you low returns. If you have invested heavily in equity mutual funds or stock portfolio, then you need to take a look and get rid of the underperforming securities. Even if you face losses, it is better to salvage whatever money you can which can then be used to invest more efficiently. You can use this money to invest in funds that have a high probability to give you expected returns in the future.
Taking calculated steps regarding your investment options can help you make the right retirement plan. However, uncertain times can knock on your doorsteps anytime. Hence, it is important to focus on savings and invest more efficiently. This means that you should determine time horizons, after-tax returns, assessing the risk tolerance and estimating expenses. As soon as you realise that you can take advantage of the power of compounding, you should start your retirement planning. However, keep in mind that the earlier you start, the better prepared you would be. Happy investing!