posted by mark
on Tue, 04/17/2018 - 08:16
While everyone would love to retire with a significant portfolio that will last them through a long retirement, many do not because they fail to address some simple steps.
- Being Motivated – You have to be motivated to plan ahead and educate yourself. Many wish that this would simply happen or someone else would do it for them. Unfortunately, each person has to take a fairly significant amount of responsibility for their own financial future. It doesn’t happen unless they are long-term motivated to stay focused on a far off goal. Like a new year’s resolution, you must develop and firmly establish long term habits if it is going to stick. It can be done, but you have to keep at it.
- Focus on saving – If you can’t control your personal budget, it will be hard to achieve the retirement you desire. This holds no matter if you earn 20k a year or 1M a year. The more you earn and want to have for your retirement, the more you are going to have to save. While you could be fortunate enough to come into a financial windfall, most have to build their core savings to build their nest egg. Relying on a windfall is more like hoping for a “Hail Mary pass”. This simply means keeping expenses below you income level. This usually takes a long runway of preparation. This means years of focus. My mom always says, “It is not what you make, it is what you keep.”
- Focus on investing – If you get the nest egg, but put all your money in a savings account to invest, it is unlikely you will meet your goal. Your savings have to grow. You have to use time and compounding to your advantage. You can’t win a marathon when you just start the race when most runners are already at the 20 mile mark. Also, if you raid your retirement assets along the way, the benefits of compounding will not be able to be fully taken advantage of.
- Constantly educate yourself – Whether you use a financial advisor or do it yourself, you must spend time educating yourself. This is not something you can just pass off to someone else without having some of your own understanding. If you do pass it off, there will be a cost that could significantly diminish your returns. Companies produce financial statements every year, but there is always an audit to make sure things are on the up and up. Your financial situation is no different – you are your own auditor.
- Control your emotions - You can do all the other steps right, but if you can’t control your emotions, you will pay a hefty price in terms of returns. Since you are investing for 10, 20, or 30 years, there will be many ups and downs in financial markets. This is just a fact of the matter. You must stay true to controlling urges to buy and sell at the wrong times. Like the proverbial turtle and the hare, steady wins the race.
These the just the basic steps. You have to make a conscious effort to develop the details behind them. And then, you must stick to them and work at it. Make it a habit.
Remember that “Every long journey starts with a step and then another and then another…” Get started today!
