I am a big fan of reading early retirement blogs. Since
there are too many great ones to talk about, I will let you use your
investigative skills to find them, or you can drop me a line at razorback2628@gmail.com and I can direct you
further.
What is even more fascinating about reading these blogs is
the majority had achieved financial independence/early retirement (or “FIRE”)
at a relatively young age (under 40 in most cases). Who says you have to be aged
65 to retire? The tradition of slogging
away at a job that you hate for 40 years so that you can collect a “pension” (only
exist in the public sector these days) at the end has been broken.
Hindsight is always 20/20. Huh, If only I had the courage to
do what these kids had done! It is not too late, people. The journey of a
thousand miles begins with the first step.
You do not have to be born a millionaire’s child to retire early. Nor do you have to win the lottery. Or perhaps hit a ten-bagger by investing in Facebook,
Amazon, Netflix when they were at bargain basement prices. Or the lucky few who worked in high-tech Silicon
Valley were able to retire when they cashed in their lucrative stock options. Fortunately, many did not achieve early
retirement through the above means. They
shared their following “secrets.”
Save, and save early.
Target saving at least 25% to 30% of your gross pay. The power or savings over
time and compounding interest do wonders to your accumulated savings. For
instance, saving just $200 per month for 30 years results in a $166,000 nest
egg at the end.
Frugalism and minimalism are very much in trend these days.
You don’t have to be the first one to own the latest gadget or parade around in
the latest fashion. It is estimated that
the average North American consumer throws away at least fifty pound of
clothing a year. Think about the environmental impact. Think about how much
cotton and precious water is required to grow the cotton.
Car is a depreciating asset. Get a good late model reliable car. Maintain and drive it to the ground. The
approximate cost of owning an average car is at least $6,000. The figure includes
insurance, maintenance, gasoline and depreciation. The amount is much higher if you own a new or
high end car.
Eat out less often. Not only it is expensive, but it is also
less healthy as restaurant food is typically laden with high levels of sodium,
fats and sugar.
Take advantage of company matching programmes on RRSP,
pension and other benefits. It is the
only ‘free lunch’ in town.
Invest in yourself and your children through education. On average, a person with a university degree
makes twice as much as someone with only a high school diploma.
Read inspirational books such as The Millionaire Next Door. Your typical millionaire does not brag
about living in a big McMansion or drive a fancy car, but is instead a
down-to-earth person.
Invest in low-cost ETFs or through company offerings. On
average, the market has appreciated at least 4%-5% on an annual basis, net of
inflation.
Avoid getting into debt like the plague with the exception
of mortgage debt. Still, it makes sense to own and use credit cards to build
your credit. One trick I learned is to auto pay a set amount from your bank
account to your credit card account each month.
Plan to own your own home. May be tough in certain markets
such as Toronto or Vancouver, but you have to start somewhere. As mentioned before, real estate is a good
hedge against inflation. On average, real estate prices have appreciated at
least 5% annual or house prices have doubled in prices every 14.4 years.
Marry someone with the same inspirational habits as you.
After all, it takes two to tango.
Develop healthy eating habits and take care of your health
by joining a gym. They will pay dividends in your retirement life as you would
be spending less money on prescription drugs.
Be charitable! What goes around comes around. You may never
know when you would need a helping hand.
Live a less stressful life. You can never solve all the
problems in the world. When the going
gets tough, the tough gets going.
I am sure there are many more tips that you can share. Would
appreciate your constructive comments!
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