Smart Investment Strategies for a Secure Retirement

Friday, Feb 2, 2024

Introduction

Whenever the main character is taking a vacation in the beginning of a movie just before taking up the most critical job of his life, he’d always be floating away, bathing in the tropical sun, while holding a drink with a curly straw in it. That’s how paradise is generally envisioned. But how far is that notion from reality? Is it just an unreliable anecdote or have smart investors really achieved such lifestyles during their retirement phase?

In this article, we shall make a comprehensive assessment of financial retirement planning. Why is it a big deal to know about financial planning? When is the right time to start saving and investing towards it? And what’s the right approach to it?

While we’re young and make money, it’s definitely thrilling!

The rush is about the potential spends which in turn correlates directly with fun.

But when you’re older, the gravity of money is very high and it starts becoming difficult to make important crucial spends because you feel it’s better saved than spent.

Of course, it’s critical that you make such hard choices to achieve your financial goals that are important later on in life to you such as traveling, pursuing hobbies, or leaving a legacy for your loved ones. 

It’s critical to actually quantify your plans. Atleast the financial ones. By knowing what your target lifestyle is going to be, you can evaluate how much spending your free time would cost you later on.  This is not as simple of an assessment to make and you need to actually figure out miniscule assumptions and data for this process before you try to come up with an accurate estimate.

Let’s get into the world of saving for retirement, making assessments, evaluating choices and their effects, and also how different targets impact your investment strategy.

Setting The Stage:

We’ll start this article with a couple of questions.

For our younger audience, here’s the question: What does being retired mean to you?

Ponder on that for a while…

For the experienced bunch; This is a question for you: How far along are you in your investment journey?

The Premise

Like the investment journeys of people, this blog too is the micro-summary of the typical investment journeys. The common misconceptions, the generic decisions, the mistakes, the stresses and the panic that investors come across. We’ll go through them all.

The main mistake that the younger investors make is their time of entry into the world of investments. Regardless of how much you make, if you systematically invest a small chunk of it consistently, you’d be well into creating value and making your money work for you before you even have time to contemplate what happened.

High return smallcase like the ones offered by Greenportfolio will work in the background to let the value of your investments grow.

Starting Young

Actually, if you’ve ever had a tough day at work, it actually makes sense to maximize your investments towards a retirement fund for yourself!

Jokes aside, say you start channeling a little bit of what you make towards a retirement fund when you’re 24 and you systematically invest a hundred paychecks. Doing so, you’re technically already 33% closer to accomplishing your retirement goal.

Don’t believe us?

A hundred paychecks means eight years and four months worth of your efforts. Typically, retirement funds are aimed at approximately twenty five years. This would equate to three hundred months. Starting at 24 means by the time you’re 32, you’re already done with a significant chunk of what you need to invest. But that’s not all, the magic of compounding is on your side too.

The Financial Independence March!

If you have enough investment income to cover your expenses, without actually relying on a job or traditional sources of income, then congratulations. You’ve made it.

Let’s look at the avenues that lets you get there.

Setting a Timeline.

When you finally start thinking seriously about living your life to the fullest, you’ll stumble across the concept of retirement. Now that you know this is something that you must achieve, the immediate question is when. Knowing how you like to live, you will have to assess your own lifestyle and the costs associated. Being aware of the timeline is a crucial first step to begin your retirement planning endeavor.

A Clear Goal.

What would be the likely sum of money essential for you to live? Your spending habits come into play here. The more you want to spend later on, the more you need to save and invest right now. Living on the lifeline every time only makes your retirement planning a bit more complex. You, as well as the future you, both need to be rational, realistic and must come to terms ASAP. The quicker you’re able to make a deal with your future self, the sooner you can get to the strategizing phase.

Charting Your Plan.

Once you have an approximate idea on the corpus that you want to build, you can start with allocating and acquiring the investment vehicles that will start their work full-time. The investment options are diverse. You might need to spend lots of time to become aware of the intricate details. But by using innovative solutions like Greenportfolio’s performing smallcases, you can supercharge this process by starting with their simple to understand, belief oriented investment options.

Maintaining Your Composure.

Let’s assume you started your investment journey and it's been a considerable amount of time. If you face a market downturn, it’s tough to witness and not stress out about it. Navigating investor sentiment is especially critical when maintaining your retirement plan. You should remember that you’re in this for the long run. Treat the unrealized losses lightly and technically, you should be happy even. Because during such extreme turbulent events, you can stop your systematic investments for a while, wait out the crash and when the market starts to stabilize, you can inject a respectable sum. Basically, acquiring stocks of all the companies that you like at a steep discount!

The Transition

This phase is when you need to rebalance and reorient the portfolio based on the modified life goals. As you move closer to retirement, it’s better to remove risk to ensure your corpus stays protected amidst market turbulence. Moving your financial assets from risky asset classes, like private equity to the safest financial asset class like bonds is quintessential. Having enough alternate assets like Real Estate and Annuities, you will be all set to ensure your targeted retirement. Taking help of expert asset management services like Greenportfolio’s PMS lets you monitor and assess the health of your investments and ensure that it is oriented for achieving your financial goals. 

 

Diversifying Your Portfolio

As time passes, you might need to make important life decisions that affect your lifestyle, your investments as well as your goals. Exploring real estate for investment portfolio diversification is an excellent option. Once you achieve your preliminary milestone with private equity, you can take out some funds to invest in real estate. They are an awesome choice, unlike equity, they do not fluctuate highly. They retain their value and act as a hedge against market downturns.

Rewriting Risk Equation.

Once you reach the final stretch of your retirement planning phase, it’s time to reiterate the amount of risk. By this time, the investment profile would have already appreciated significantly. So much so that you need to actively start protecting it!

Assess the state of your portfolio and determine the target. Gradually start rebalancing it by selling some of the riskier assets like stocks and replace them with safer options like bonds.

Expert asset managers suggest that you should start the shifting to safer assets when your retirement savings reach 25 times your annual expenses or when your investment income can cover 80% of your pre-retirement income.

Smart Retirement Strategies

The Bucket Strategy:

You divide the entire retirement savings into three or more buckets.

You can keep one bucket to make spends. This will include cash and short-term bonds for which will be useful for spending in the near term. Within a year or two.

The second bucket will have intermediate-term bonds investments and dividend-paying stocks. This bucket will strategically be oriented toward growth. This goes on for a considerable amount of time; anywhere between 3 to 10 years.

The third bucket will be the hedge which is accomplished using long-term assets and alternate investment assets like real estate, commodities. The aim is for it to give inflation protection for the coming decade or more.

Floor-Upside Strategy:

The floor refers to the guaranteed income that covers your basics during your retired life. The rest of your savings will go back to growth-oriented assets.

The Bottomline.

Everybody wants that perfect retirement. This blog tried to hint at what lies on the other side and how to achieve that feat. With the right approach and an organized plan, it's definitely possible to not only achieve your financial freedom but you’d be surprised to know that the turnover will be better than whatever you would have hoped for.

Making smart decisions when you are young by investing in risky high-growth potential stocks through carefully calibrated and maintained stock profiles like Green Portfolio’s High Return Smallcases will ensure that you’re off to a great start. By taking help of asset management leaders in the responsible investment scene, you will get enough time to gain real insights into the world of finance yourself while your investments would already be working for you while you’re doing so.

Mature investors who already have a portfolio of investments and have  approached the transition phase, but are confused on what’s next is truly a stressful endeavor to go through. Thinking through all the complexities is hard. With Green Portfolio PMS, you will be able to get immensely beneficial advice that sets the trajectory of your portfolio and better optimizes it to reach your modified financial goals.

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