Content

• Steps

For most people, retiring early and maintaining a standard of living above the poverty line is not possible. If your top priority is to retire early and stick to a strict roadmap for that purpose, you will probably be able to leave your job completely by the time you turn 30. You need a high income and a moderate level of spending. must or will have to save each year and adopt a frugal lifestyle.

Steps

Method 1 of 3: Financial Management

1. 

   Calculate how much you need to save for retirement. The dream savings for early retirement and not having to work again lie somewhere in the range of 100-200 billion. But this is only a general number and it may not be appropriate for your financial situation or lifestyle. A more accurate formula would be annual expenses multiplied by a number between 20 and 50. This wide range (20 to 50) allows you to determine how much to save based on actual needs. own.
   • For example: If you make 600 million VND per year, you will most likely need to save 12 to 30 billion VND.
   • A safe withdrawal rate is the amount of money that, when you are no longer working, you can withdraw from your savings and investments each year. So if you multiply your annual spending by 25, the safe withdrawal rate you're using is 1-2%. Once you retire, you'll have 1-2% of your investment to consume each year. To avoid affecting the original assets, the rate of withdrawal must be less than profit after tax.
   • Inflation and market changes are difficult to predict and will affect the real value of your ready-to-retire savings. But according to Trinity Study, with or without inflation, market crash or other financial problems, a safe withdrawal rate of 1-2% is a safe choice for most individuals who want. early retirement.

2. 

   
   
   Set a retirement goal or amount. Using a safe withdrawal rate of 1-2%, calculate the amount of money you need to be able to retire successfully and comfortably. This depends on many other factors, such as how many members of your family (saving only for you? Saving with your partner, who also has income? Or saving for the whole family? ) and your lifestyle choices. Sit back and estimate the amount higher than you may need and then work towards that goal.
   • Consider factors in life such as how many people the savings will have to pay, your current situation (do you own a home? An apartment?) And your standard of living (you love a luxurious lifestyle and do not want to give it up or are willing to live more frugally?).
   • With a three-member family in which two earn income, your retirement goal might be 12 billion in savings with the house paid off. Using a safe withdrawal rate of 1-2%, once you retire early, your family will likely have 480 million to live on each year. Remember that this depends on factors like your life span and the return on investment each year.

3. 

   
   
   Work with a financial planner. If it's just to define an investment, hiring a financial planner is not necessary, as there are a number of online resources and financial management books available in the library. However, a financial planner can also help you meet your retirement goals and streamline your investment.
   • Ask a financial professional about asset allocation. Asset allocation is the distribution of savings into different types of investments, such as equity funds, bonds, money markets or stabilization funds. For example, a portfolio of 80% bonds and 20% stocks would offer different returns and risks than a portfolio of 15% bonds and 85% stocks.
   • In your 20s and 30s, you should actively invest, especially if you want to retire early. If possible, allocate up to 80% or even 90% of your assets to a variety of stocks and bonds.

4. 

   
   
   If in the US, join the retirement program provided by your employer. Most companies have 401 (k) funds. This is an employer sponsored fund, where they put an extra amount of money into it. For example, if you have 30 million in a 401 (k) fund then corresponding to that amount, your employer will probably give you 30 million more. There is an annual cap on the fund's contribution and as we advance, it will be extended. Turn extra wages into retirement savings and don't use them.
   • If you can't afford to transfer your entire salary into super, you can also gradually increase your contribution to your 401 (k). You won't miss this money as you gradually increase your savings.
   • To retire when you turn 30, you should increase your closing rate 401 (k) to increase savings and sponsorship from the company.
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Method 2 of 3: Earn enough money to retire early

1. 

   Pay off all your bills and avoid debt. If you have a lot of debt, try to form a bond with the lowest interest rate. Pay as much as possible each month until the debt is over. Then, avoid debt from using credit cards or loans. Maintain good credit scores and be debt-free.
   • Once there is no debt remaining, put the amount of capital devoted to repaying each month into your savings account.

2. 

   Generate additional non-salary income. If appropriate, focus on reaching your retirement goal faster by working overtime. Taking chores for family or friends will help you earn extra money for your savings. Remember that every penny you save brings you closer to retiring early.
   • Some places do not allow you to work part-time at another company. Check your employment contract or check with your company's HR department.
   • Working hard at your current job for a raise, bonus or promotion instead of focusing on other jobs after work may be a more viable option.
   • Think about skills or abilities that could translate into extra income. It could be writing, making or designing a garden. Try to maximize your skills and earn more for your savings.

3. 

   Get your spouse involved in your retirement plan. If you live with your spouse or are in a long-term relationship, your retirement plan should have the support of your spouse. Working out a joint retirement plan together and agreeing to lifestyle changes will help you both reach your desired retirement goals.
   • Combining your resources can also help you both reach your retirement goals faster.

4. 

   Reduce monthly spending. If you are renting a room or apartment at an affordable price, focus on cutting other costs like internet, phone and food. Reducing 200-400 thousand per month can add to your retirement savings account.
   • To get plenty of money, set a savings goal above everything else. This means accepting a frugal lifestyle and not spending money when it's not absolutely necessary. For early retirement, eliminate your craving for new or expensive goods to avoid spending on those products.

5. 

   Biking or walking instead of car or motorbike. One of the biggest costs comes from your car, especially your car. Need a large sum of money for their maintenance and insurance. When possible, use your bike to work or run errands instead of filling up your gas tank for them.
   • Investing in a good bike means that with a small amount of money, about 10 million, you will have transportation for a long time, maybe a lifetime.

6. 

   Avoid eating out. On average, most households in the US spend 12.9% of their income on food each year. Reduce your food expenses by cooking yourself and eating out only once or twice a year. Some affordable blogs and cookbooks will give you quick and good recipes for your budget.
   • Make shopping a habit every week. Make a list before going to the store to avoid spontaneous expensive or unnecessary purchases.

7. 

   Join in free entertainment. Minimize entertainment costs by finding free activities in the city or region you live in. Take advantage of free entertainment such as walking or hiking, free fairs or local events.

8. 

   Promote a self-active lifestyle. Self-repair, car maintenance to avoid costly with maintenance and repair services. Learn how to fix a bike yourself with online video tutorials. Being resourceful means you will have the skills to get things done on your own and not pay for those services. advertisement

Method 3 of 3: Financial investment

1. 

   Invest in stocks and bonds. Each share represents one share in the company. When you hold stocks, you own part of the company and have rights over all the assets and every penny the company earns. A bond is a debit issued by a company or government organization to fund specific day-to-day operations or financial projects.
   • When you buy a bond, you are lending money to an issuer, a company or a government agency for a certain period of time. In return, you will be paid interest and the full loan amount on a specified date (the maturity of the bond) or a future date selected by the issuer. For example, if a bond is worth 20 million at a 7% interest rate, its annual yield is 1.4 million.
   • You can invest in stocks and bonds by buying them directly or through mutual funds. A mutual fund is a collection of bonds, stocks, cash equivalents or a combination of the three above.
   • When you are young and just starting to invest, you should put money in stocks. The long term growth potential of stocks outweighs their risk. Bonds are less volatile and are a good investment in the long term. Over time, as you get older, you should reduce your stock investment and increase your bond investment.

2. 

   Study "tangible assets". Tangible assets, like gold or real estate, are illiquid: you can't literally split or liquidate them for sale. Due to this nature, investing in tangible assets can be tricky for newbies. However, real estate investments enjoy a variety of tax incentives, can be used as collateral for capital loans and provide high returns if carefully selected.
   • Focus on smarter investments like stocks, bonds, and cash equivalents.

3. 

   Put some of your earnings in an Individual Retirement Account (IRA). They are savings accounts with great tax incentives. The IRA is not an investment account. They are your basket of stocks, bonds, mutual funds, and other assets. There are many types of IRAs: Traditional, Roth, Simplified Workers, and Compensate Contribution Incentives Saving.
   • There is also the Dividend Reinvestment Personal Retirement. It's a popular and secure portfolio in the form of a Personal Retirement account, offering high value with low commission costs.
   • Consult with your bank or financial advisor about the IRA. Each type of IRA has different conditions for participation, depending on your income or employment. They set the maximum you can pay each year and the penalty for withdrawals before the specified retirement age.
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