Most people hinge their retirement failure on poor salary during their working life. No matter how much most persons earn, they will always be broke before the end of the month. The secret of making financial preparations requires determination, sacrifice, and focus.
Personal financial planning is one secret of successful retirement that many people ignore. Personal financial planning involves the decisions made by an individual which entails analyzing your current financial position through budgeting, insurance, savings, investing, debt servicing, mortgages, and more. Personal finance looks at how your money and future is managed.
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Financial planning is very important, as it helps you make reasonable decisions about your spending, you'll tend to focus on your needs, and not your wants. You'll make up your mind whether to buy on credit and accumulate funds, or concentrate on buying what you can afford. With financial planning, investment that would have ordinarily been ignored would be noticed, you become financially independent, and outlive your finances in the long run.
In an attempt to carry out financial planning, you ought to know what you want your finance to be in the future. In order to achieve a good financial plan, you ought to
Make decisions on how to handle your salary, and other sources of income when it comes.
Know how to handle cash flow and documentation of day-to -day expenses.
Get a risk management plan for example, insurance to cater for emergencies. Some people think those that get life insurance are pessimists.
Have an investment plan, and save your money.
Have a tax management plan, to help reduce taxes.
HOW TO RAISE CAPITAL FOR RETIREMENT
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To look at different ways of raising funds retirement, different areas of investment are explored
How to build up your capital
Most people do not start investment because they assume investment is a risk. Some also perceive that their income is too small to provide capital. There are others too on the same salary with more responsibilities that still build up their capital for investment or for a rainy day. The underlying principle is self and financial discipline. Most work places have systems in place that help their personnel to save compulsorily. The most popular among this is co-operative societies. There are many forms of co-operative societies. For example CREDIT CO-OPERATIVE SOCIETY: This is the commonest in most workplaces. This is the best for raising capitals for investment. The members contribute a certain amount of their salary, pug them together and members can get loan from there without collaterals. The interest paid back here is very minimal a lot lower than bank interest.
MONEY MARKET INVESTMENT
They include banks, financial institutions, discount houses.
Savings:
Some people open a savings account where they put a part of their salary and some can call it retirement savings. Though it is better than spending up all your earnings but saving yields neglible interest and overtime the interest and capital is eaten up by inflation. However when the money grows the money can be moved to other areas of investment that can generate more revenue. This has to be done with caution to avoid losing one's money to fraudulent investors.
Fixed deposit:
One can fix some capital in the commercial banks or recognized discount houses to generate more income. This attracts more interest than ordinary savings, funds generated in due cause can be shifted to other investment as establishing business enterprises, real estate and so on, it can also be invested in other areas that can allow the money to work for the investors.
CAPITAL MARKET INVESTMENT
Capital market investment is all about stocks and shares. Here are some advantages of buying shares
It is a way of saving so that you will not keep excess money for others to spend for you.
It helps you to accumulate wealth if you buy for long term because shares keep appreciating.
It provides dividend on your investment.
It gives you additional shares as bonus.
It can act as a collateral if you need to get a bank loan
You can sell some so as to generate more income for a business, or to spend on rainy days
LOANS
Borrowing money is one of the very big secrets towards creating wealth. It can also make one poor and miserable. Therefore borrowing is like a two edged sword. Most people have not learnt how this can make on rich. This secret of making money is always abused by ignorant borrowers. There are good loans, and there are bad loans. Any loan that is spent on liabilities is a bad loan, and any loan that the money is spent on asset is a good loan.
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Most importantly, we shouldn't forget that determination to monitor your finances, and discipline to manage income and expenditure is the key to a successful financial retirement plan.