Invest Early, Retire Early

Many have retired living off of their investments. They enjoy ample time to relax, exercise, and do things that they always wanted to do. How is that possible? Were they all business tycoons of yester years? No! Not at all! Rather, they are the ones who made wise choices. They are the ones who acted early. They are the ones who worked on their retirement plan consistently. Similarly, you too can retire early and relax if you start off early on the right foot.

What does it take to retire early?

Here are the three crucial steps. Let us call them the three E’s of early retirement.

Early

Easy

Effective

Early

Start investing as early as you can. Starting early minimizes investment amount. This is especially true if you are fixed income earner. You need to set aside only a small percentage of your total income because you have more time at your disposal to allow the investment to grow. However, ensure that even if the amount is modest, you do it consistently. Because it is consistent investment that creates wealth. This is a law of money. You can increase the percentage of your investment as and when your fixed income increases.
Cultivate discipline by managing your daily tasks in a meticulous manner. From the time you wake up in the morning until you go to bed, you are doing plenty of different tasks. If you can focus on each task and complete it before moving on to the next, you’ll complete all your tasks with excellence. When you bring this skill to the trading desk, you can expect nothing short of consistent performance.

Easy

Because you don’t need to invest a big amount, you have the time to invest in bits and pieces. More importantly, you have the time and energy to spend some extra hours a week to invest in your retirement plan. Just think of all those things you could do effortlessly 10 years back and see if you can do those same things in the same way now. Chances are that you are incapable of doing it with that same level of perfection or ease.
Why? The answer is obvious – you are ageing and your ability to think and act with the same efficiency is gradually declining. Now think 10 years ahead. Do you think you will be able to get things done with the same efficiency? You may continue to work 15 hours a day, but your productivity will likely not be as high as your current level.
The best time to invest was years before.

Effective

Investment needs some time to grow. Just like how you cannot get apples out of the seed that you planted yesterday, you cannot start reaping returns from investment in a very short period of time. Any investment to become effective needs a reasonable length of time. Therefore, it is a wise idea to channel your investment to income-generating assets.
For instance, if you are 25 years of age now and plan to invest $10,000 per year. Your investment may reap profits and suffer losses, so let us consider that you earn an average of 8% return per annum on your investment. Then you will have around $10,800 at the end of the year as your savings. Now, you are investing the same amount in the next year as well. That would mean you will get interest for $10,800 as well as the fresh amount that you deposited in the second year (i.e., 10,800 + 10,000 = $20,800). In this way, by the time you reach 55 years of age, your retirement fund will be around $1,223,458!
Investing $10,000 p.a. will fetch