retiredHmmmm…this is tricky. Where and how should I begin?

Retirement planning is kinda like one of those things that you don’t want to care about now because it’s too far yet, it’s complicated, it’s boring, and on top of that, you already have a LOT of expenses at the present and you don’t want to add more.

I know. I know. But hear me out here. Retirement planning is very important because if you have enough on your retirement fund, it can provide you a comfortable life when you are no longer working. Take note. NO LONGER WORKING which means no more income coming in. It will pay for your basic necessities and your wants. Isn’t that we want when we get old retire? To relax and to be able to enjoy the things that we REALLY want to do rather than… working?

Retirement 101

Some companies provide retirement plans to their employees in the form of a 401K (or some other similar plans). 401K what?? 401K is an employer-funded retirement plan wherein they take out some percentage (or fix amount) of your paycheck and they INVEST that money on stocks, mutual funds, bonds etc. which could generate dividends (fancy term for interest yield). It is very important that we invest early because of the power of COMPOUNDING. Compounding is a process when your initial investment plus the interests that it earned earns you another interest. Ain’t that fab??! An interest on top of an interest? And it doesn’t stop compounding until you withdraw it. Can you imagine how your money would balloon if you invested early in life??

Are you with me so far? A little overwhelmed? No worries. That’s normal. When I was learning about retirement, I was like “Holy smokes! Uhmmmm, what are all these alien words??”

To put it in simpler terms, you put down money now to get more money later on.

And no, it’s not being greedy for wanting more money. It’s getting prepared before we become 60-ish. Social Security might not be enough or maybe even non existent when we retire. It’s kinda like saving, but on a longer term. Now, I want you to double check with your personnel at your workplace if they offer such retirement plans.

But what if my company does not offer retirement plans?

No fret. It’s not the end of the world. You can always go to your local bank or credit union and ask them the retirement plans that they offer. Their financial advisors should be able to help you. Or… you can do the investing yourself. I do some investing of my own. Well, isn’t that scary? I am not a pro or anything but I only invest on stocks and mutual funds of companies that I trust. I will be writing a blog later on about my investing experiences and what funds I chose to invest in.

P.S.

Another thing to remember about retirement and investing is that, like life and gambling, there are no guarantees. Meaning, you might lose or gain money. The stock market always change. But why would you invest if there’s no guarantee? Good question. You see, it’s been statistically proven that investing in stocks and such, generate higher returns to your money in the long run (even if there are some losses along the way) which is the main goal of retirement planning.

Before you invest though, make sure that you know what you’re investing in. Only invest money that you’re comfortable with. If you’re only comfortable with $20 per month to begin, why not? Do your research. With the internet, you can almost research everything about stocks,mutual funds etc. Invest in companies that you trust.

There’s also this investing technique called diversification which means that you put your money on different investments to minimize risks. If you only put your money on one investment vehicle, if that investment porfolio goes down, your investment goes down… BUT if you put your money in a variety of investments, then the risk would be minimal. Some might go up, some might go down.

Bottom line is, retirement is inevitable. It’s a part of our lives. We are all gonna go there. And we want to be as prepared as we can when it comes.