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Posts Tagged ‘personal finance’

Secret of Achievement

The title of this post should be “Top 5 Reasons to be Financially Free at 35” instead. It is okay to continue working if you love your job or the business that you’re in. The problem is that most of us don’t even know whether we have an option of retiring early. That’s what the corporate world does to us; it can kill the Creative, Imaginative and Adventurous side of us if we are in it for too long.

But what’s the big deal if we retire at 35 or 40? What’s in it for us?..one may ask.

I have prepared top 5 reasons to retire early in current landscape: in terms of economy, our lifestyle, relationships etc. They say we only live once. With that in mind, let’s see if we have anything to gain by dropping out all of a sudden…of course with careful planning behind the scenes 🙂 .

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I got the inspiration to write this post after reading a book titled “Cashing in on the American Dream: How to Retire at 35”. This book was written by Paul Terhorst about 25 years back. The main idea is to save enough from a high paying job in the US and then move overseas (cheaper location) to live off your investments. And you do this while you’re young, living life to the fullest and doing what you really love.

 

Cashing in on the American Dream

Paul used to work for a major accounting firm when he retired at 35. Once quit, he never looked back. He still travels and blogs; you can get the latest updates and some tips from his blog at this link.

I’m surprised that even 30 years back, people were thinking of an Extreme Early Retirement. I guess the “Desire to Break Free” has been in our blood since time immemorial 🙂 .

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Life Insurance1

Once we know that Term Insurance policy is the simplest and cost effective solution for our Life Insurance needs. The next question is how much cover do we need?

In my experience, I have noticed that majority of the folks are either under covered or have life insurance in excess. The answer is different for every one so we will try to find ways to determine an ideal cover for different situations.

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Term Insurance1

I’m sure that somebody has already tried to sell you an Insurance policy (anything but Term) at some point of time in your life, actually it might happen multiple times. The worse is if we walk into the trap ourselves, in the hope for higher returns, guaranteed income or some savings on taxes.

I was at the bank yesterday and one gentleman walked in. He was a new customer that was going to bring in funds to the bank. While opening a savings a/c, he asked the customer service manager for advise about Mutual Funds. Lo and Behold, the bank rep immediately suggested a Life Insurance policy instead and started to talk about its benefits. Within no time, the customer was convinced. I sat there helpless, couldn’t do much as I was at the wrong place and at the wrong time.

These incidents are not new to me, I have been in that customer’s shoes long ago and continue to come across such situations with my friends and family where I have to warn them of these products. The Life Insurance policies are the worst investment products. They come in different packages such as Universal, Ordinary, Variable, Whole Life, all kinds of Annuities (USA), ULIPs (India) etc. I don’t think there will ever be an end to these. So what’s so terrible about them?

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This is the question that we usually ask when we have amassed a decent balance in our savings or checking account. For some, it might be 10K and for others a million. The amount is irrelevant. We are willing to venture out and ready to take risk as long as the return is higher than the savings accounts or fixed deposits.

Should we invest in real estate, mutual funds, stocks, gold or insurance? We turn to our accountant for advise, watch or listen to stock channels and other investor friends. We start reading Money, Fortune, Kiplinger’s or other personal finance magazines. In addition to all this, the endless hours are spent surfing Morningstar, MSN money, Motley Fool and other financial websites, researching the best performing mutual funds, industries or stocks.

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