How to Maximize your retirement savings| North Loop Official Blog
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North Loop
26 Nov 2020

How to Maximize your retirement savings

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Everyone wants to retire young and rich, but one would have to forgo a lot of wants and make a ton of sacrifices to retire at a very young age.

Retirement planning is not easy, and most individuals are unaware of the right way to go about with their retirement planning.

This article uncovers a few tips and tricks to get you up to speed and help plan your retirement in the most effective way.

One would have to start investing part of their income for retirement from the very beginning of their career to make most of compounding interests, which help snowball investments.

Best retirement plans-

Financial advisors recommend individuals between the ages of 20 and 30 to save an amount equal to their salary by 30. Most people falling in this age bracket will have more appetite to tolerate risks. Thus, we recommend individuals to make investments in high risk-high return type of instruments over a long period of time.

Financial advisors recommend individuals between the ages of 40 and 50 to save 3x their salary by 40 and 6x their salary by 50. Individuals falling under this category are more likely to make passive, laidback investments into a more stable set of instruments with low risk exposures.

Financial advisors recommend individuals who are within 15 years of retirement to save a huge chunk of their income. At this stage, advisors recommend individuals to invest money in risk-hedging instruments.

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How to save and how much to save?

Try and match your employer’s contribution to your retirement savings account (like PF) by saving the same amount of money periodically.
This way, you would be able to achieve your retirement goals in less than no time.

Try and save 15% of your pre-tax income every year. This income can include any bonuses and hikes in addition to any matching or profit-sharing contributions from an employer.

Set up an automatic contribution that contributes a fixed amount of your income to your retirement account. Ensure that the amount gets deducted from your account on the same day you receive your paycheck.

Invest your money in tax-saving instruments that help your money grow as well as enjoy the benefit of tax deductions.

Retirement investing: Best investments for retirement-

The first step before you decide to invest money is to establish your retirement goals, investment tenure, and risk appetite. A proper retirement investment plan can help you decide on an apt asset mix and a proper portfolio.

Always remember to set up an investment portfolio in such a way that the investments are diversified. Diversification of portfolios help spread risks as well as maximize returns earned.

We advise investors between the ages of 20 to 30 to invest in market-linked tools such as stocks or mutual funds. These investment tools have a higher risk exposure than others but offer relatively unstable and high returns over the long run.

We advise investors post 30 years of age to invest in instruments that provide stable returns and have lesser risk exposure such as, fixed deposits and Public Provident Funds (PPF).
Investments in instruments like PPFs not only help grow your wealth but also help you save tax.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.