Elements of a Healthy Retirement Plan
- 4 | Well fed -
Feed your fund
and feed it often
Bulk up. A phrase that strikes fear into the heart of many a gym fanatic. Either because muscle growth is unwanted. Or because it always seems to come with some strings attached. Weight gain being the main one.
In the world of money, weight gain is good. The more the better. Combine this with the 'keep it lean' fee-related mantra and you've got yourself the ideal plan. And the earlier you start that bulking up process, the better.
Time is your ally
Excuse the pushing of the analogy. Hopefully this is not too cheesy. But the world of food and fitness suggests you should breakfast like a king. Because that sets you up for the day.
And so it is with feeding your retirement. The more money you get in there during the early years, the better set you will be for life. Because of:
When you invest, all being well, you money starts to grow. Over time, that growth increases. And the growth you achieve then begins to earn growth on itself.
And the longer the money is invested, the more growth on the growth. In fact, after 20 years or so, as much as half your return could be the result of growth on growth. Money for doing nothing more than just leaving your savings where they are.
And the longer you leave it, the more impressive the effect of all this gets.
2. Habit forming
You might think that saving the odd £20, or £50 here and there is pointless. Nothing compared with the big dreams you've got for the future. You would be...well, I won't say wrong, exactly, but there is some psychology at work here that is more powerful than these absolute numbers would imply.
When we do something we like, we do it again. As we repeat it, we start to get better at it. And if we keep doing it, it will eventually become a habit. An almost unnoticed element of our daily routine.
If that habit is saving - even if it starts with a small amount - not only do the small amounts start to add up, but you get better at it. Better at finding money to save, better at budgeting. Better at managing your priorities.
All of a sudden, you're saving half of every pay rise you receive before the increase has even hit your account.
Which, in terms of feeding your retirement plan, is the pinnacle of greatness. The kind of behaviour that is so amazing, it even gets a mention in our eBook, 'The Secrets to Wealth'.
(Along with 6 others, if you're interested in taking a look).
The best day to plant a tree...
We aren't all 25 anymore (more's the pity). Yattering on about starting to save early is therefore all very well. But what if you've already missed that boat?
As the Chinese proverb says, 'The best day to plant a tree was 20 years ago. But the second best day is today'. It is never too late to do something. There is always a chance to make a difference. But now is time to do that something. Don't miss the opportunity again.