Whether you just graduated college or are looking forward to retirement, it is important to have a solid plan for your finances. We believe in a “self directed philosophy” when it comes to retirement planning and that each individual should be in control of his or her financial future. Each person is a little different and will need to structure their own plan differently, but there are a few general insights into retirement planning that we want to share.
3 Tips for a smarter and more profitable retirement planning
1. Don’t just set goals, understand your goals
It is easy to set goals for yourself. “I want to lose 100 lbs by summer.” “I want to make a million dollars next year.” Anybody can set any goal they want, but if those goals are not obtainable then really they are just wishes. Setting obtainable goals for yourself requires you to understand where you are now and what it will take for you to get to where you want to be. Ask yourself, “If I want to have a million dollars set aside for retirement, what will it take from me to get there?”
2. Know your resources and how to use them to the fullest potential
Resources come in all shapes and sizes. They can be people, online tools, or even your own personal knowledge. In order to have great retirement planning skills, you have to be able to know what resources you available to yourself and how to use them. For example: If you have been working in the real estate industry for years and know how to analyze markets then why not utilize your knowledge as an investment resource? You could invest your IRA into trust deeds, rental homes, apartment complexes, and more.
3. Understand the time value of money
The most powerful financial mechanism in the world is compounding interest. This happens when you use the interest earned on an investment to earn more interest, literally interest on top of your interest. The reason that money has “time value” is because the longer you are able to build interest on top of your interest, the more exponential growth your portfolio will see.
Narrowing down retirement planning into 3 general tips is helpful, but it definitely won’t cover everything you should know. USelfDirect.com is jam packed with all kinds of tools and resources that can help you better plan for retirement.