Retirement planning: starting early for a secure future

Starting early with retirement can bring on an improved personal life in more ways than you can imagine. Let’s list them all in one place. I want to include all the potential benefits I can see because investing early and creating a long-term savings plan will definitely positively impact your personal life.

Compound interest

Starting as soon as possible allows the money you put aside and your other investments to benefit from the power of compound interest. Capitalizing on compound interest means you’ll benefit from earning interest not only on your initial investment but also on the interest earned over time. The earlier you start investing, the more time they have to grow exponentially in the long run. Here is a whole article on our blog dedicated to compound interest.

Long-term goals

Planning for your retirement will inevitably involve setting some sort of long-term financial goals. You will eventually have to sit down and write your goals down, so starting as early as possible will inevitably give you more time to achieve these goals and work on them. Giving yourself a longer time horizon to work with will help you adapt better to factors such as market fluctuations and take advantage of any of the growth opportunities that might arise down the line. In the category of long-term goals, I want to also highlight how financial education, whether it’s academic or self-taught, will inevitably change the whole trajectory of your life. The longer you spend in the world of finance and investing, the longer you’ll have to train yourself and acquire knowledge and skills. Old trends come back both in fashion and finance, something you study today might pop up again 10 years down the line.

Increased control and flexibility

Starting early and figuring out things as soon as possible will ease your nerves, give you more control over your financial future, and greater flexibility in how you choose to live your life and spend your time. Once you set down your financial goals and start working towards them you’ll have the opportunity to make informed decisions about your career, lifestyle, and spending habits.

Ability to take risks

There’s a lot of freedom in the ability to make mistakes, and starting early allows you to take more and more risks with your investments as you grow and learn. You’ll be able to allocate a higher percentage of your portfolio to growth-oriented assets such as stocks and state bonds, and if you’re at that age, as you grow closer to retirement you can gradually shift to investment strategies aimed at preserving capital in a more conservative way. Investing early, learning how to do it, and how to “survive” losses and risk will shape your character. You might discover you’re more resilient and capable than you might have thought in the past.

Inflation protection

Especially in the last 4 years, inflation has proved itself one of the biggest threats to your savings. It erodes the purchasing power of money over time, slowly but surely. Starting early will allow you to create and build your little retirement nest egg that will keep pace with inflation. Your savings will maintain their value and provide you with sufficient income to cover living expenses you’ll face down the line and once you retire.

Emergency preparedness

Starting soon will give you more wiggle room to counteract what life might throw at you. Life is unpredictable, and many unexpected expenses can derail your savings if you are not fully prepared for them. If you decide to start saving and investing early, you’ll hopefully be able to build a financial cushion that will help you cover those emergencies without derailing your long-term goals.

Reduced financial stress

Laying down the groundwork early on, if you can do so, will alleviate future financial stress you might run into later in life. Knowing you’re more or less set up for the rainy days can provide you with the peace of mind you’ll need to focus on other aspects of your life without having to worry about money all the time. You might switch the worry for money for the anxiety that comes from investing and playing around with stocks, but the benefits down the line will surely outweigh the downsides.

Improved health and well-being

Financial stability will impact your overall health and well-being in many ways. Studies have shown that financial stress and its consequences are linked to various health issues, including anxiety, depression, and physical diseases. Investing early then becomes not only an investment for you and your family in terms of having enough funds to spend and invest, it becomes a matter of health and physical fitness.

Stronger relationships

As I mentioned in the point above, financial stability and security deriving from early investments and early retirement can positively impact all areas of your life, including your relationships with your family and closest friends. It will reduce conflicts and provide a solid foundation for building and maintaining meaningful connections and building a future together. Working and investing will also likely put you in contact with people working and investing in the same field as you, growing a network of like-minded individuals and freelancers will greatly improve your social skills and allow you to grow and become a better version of yourself.

Disclaimer: This article has been distributed for educational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.