How to be Financially Secure?

A Radical Shift in Mindset and Hard Work will create Financial Security.

  • Finance Strategies: We would all be a lot richer if we were logical and efficient about making and managing money.
  • Money myths abound, many perpetuated by a lack of knowledge or understanding.To make inroads into the kind of financial life we would like these myths need to be imploded.


Are your Financial Goals are Hindered by the following Myths:


1. I don't Need a Financial Advisor.

If, you are serious about your financial security, it is in your interest to speak to someone who truly knows what they are doing.

2. Saving Money is Crucial.

While this is true, not spending money irrationally is vital, but saving alone is not going to create meaningful wealth, it has to multiply. Simply add up the money coming in, deduct what has to go out and put aside the rest in saving and investment.

Forbes : Best Money Advice we ever got.

3. I Don't have enough Money to Start Investing

Even if, you haven't paid off your house and your car, you should still put money into investments. Few people between the ages of 20 - 50 are debt free as they are busy growing their wealth.

Successful investing is creating the right habits early and paying yourself at the beginning of the month. Some investment options require as little as $50 per month, but over time, with compounding interest and a favourable investment selection, it will turn into a considerable sum.

4. The Stock Market is Diving, Cash in your Shares.

The flight instinct ratchets up when the markets take a knock, but it is then that Warren Buffett and other seasoned investors take out their wallets. While the stock market is volatile, and providing you did not invest in companies like Lehman Brothers, those who rode out the 2007 - 2009 meltdown, would have made excellent inflation beating returns today.

5. Renting is throwing you Money Away

Renting can be beneficial depending on who you are and what you do. Initially with a mortgage, you pay off the interest on the loan first, which may be more than your rent cost. You save on rates and taxes, levies and repairs which costs would be for your account if you bought.

6. Owning your Own Home is always a Good Investment

All investments involve an element of risk, though property is generally low risk. If they build a highway next door to you your property value will drop, if the property values rise, you would have to sell the property, and downsize to realise the profit.

Buying a property to rent out is another option, but calculate the cost of the property, including interest on the mortgage, levies, insurance and maintenance and the times between tenants when you have to pay the bond, but the rent is not coming in.


7. You Get What you Pay For.

Expensive doesn't always mean quality, generic drugs being a case in point. Before you buy something simply because the purchase is a habit, consider what truly gives it value.

8. I'm too Young to Worry About Saving for Retirement.

The younger you are, the more years of compound interest you have ahead. Einstein called it 'the eighth wonder of the world', adding "He who understands it, earns it, he who doesn't, pays it."

If you are young there, is nothing to think about, get out there and start doing it.

9. I'm too old to start Saving for Retirement.

The best time to start is in your early 20's, the second best time is now.

Your money won't attain the full benefit of compound interest, and you may end up with $1m instead of $3m.

If you don't need your entire nest egg the day you turn 65, there are ways to make it keep growing until you genuinely need it. Speak to a financial advisor for the best way to play retirement catch up.

10. You only have to beat Inflation.

Beating inflation is often given as the single most critical function of long-term saving, but fighting inflation does not stop at retirement.

The real problem is the changing spending patterns as you age. At retirement you are not dealing with education, new vehicle purchases, new furniture or appliances, but the cost that does become the focus includes medical and pharmaceutical expenses and these costs typically experience inflation way above the norm.


How to get out of Debt Fast

The fact is that pensioners typically get a lot less income - which will increase, at a slower rate than a salary - and have to cope with a higher level of inflation. This is a worldwide phenomenon, where people are struggling to make their savings meet their needs later in life.


How much do I need to Invest In Order to Fund 70% of my Income

(adjusted for inflation) during Retirement?

Investment Start Age
% of Salary to be Invested.
20
9.4%
25
11.9%
30
15.1%
35
19.6%
40
26.1%
45
35.9%
 
 
Assuming your salary grows at 6% per annum - Investment grows at 10% per annum Retirement Age is 65 - Years of Income Needed 25 - you will live for 90 years.

Spending Patterns

Tapping into the 401k and any other means of pension fund saving that is tax deductible, will give you the opportunity to save more, without the capital outlay.

Beating inflation is often given as the single most critical function of long-term saving, but fighting inflation does not stop at retirement.

The real problem is the changing spending patterns as you age.

At retirement you are not usually dealing with education, new vehicle, new furniture or appliances purchases, but the costs that do become the focus - are medical and pharmaceutical expenses and these costs experience inflation typically way above the norm.

Pensioners typically get a lot less income - which increases at a slower rate than a salary - and they have to cope with a higher level of inflation.

This is a worldwide phenomenon, where people are struggling to make their savings meet their needs later in life.


Retirement Planning out of the Box (Funny)

Suze Orman - Do this to really Save

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Comments 9 comments

tipstoretireearly profile image

tipstoretireearly 4 years ago from New York

Excellent hub! It's amazing how often you hear people talk about all of these myths as if they are unquestioningly correct. It shows the need for more people to educate themselves about financial matters in order to attain financial security.


CyberShelley profile image

CyberShelley 4 years ago Author

tipstoretireearly, Glad you stopped, and thank you so much for visiting and reinforcing my hub! Much appreciated.


CarlySullens profile image

CarlySullens 4 years ago from St. Louis, Missouri

Wow! It is like you sit down the reader and have a real heart to heart with them. Managing money is so important, and I think the previous generations were better at it.

I appreciate your candidness and your logic to what needs to be done, and just do it.

Way to go.


CyberShelley profile image

CyberShelley 4 years ago Author

CarlySullens, Thanks for the really great comments, so appreciated as is your visit!


mperrottet profile image

mperrottet 4 years ago from Pennsauken, NJ

You are so right about the shift in spending that occurs as you get older. My husband is diabetic, and we are spending increasingly more money for medical and pharmaceuticals as a percent of our income as we age. This is a good article, and hopefully it will encourage people to make good financial decisions for their future.


CyberShelley profile image

CyberShelley 4 years ago Author

Mperrottet, thank you for the visit and your comments. It's very scary as living for 20 to 25 years after retirement is the norm today. Everything, including blood pressure, goes up except the pension!


Mama Kim 8 profile image

Mama Kim 8 4 years ago

You brought up a lot of great points to think about. I'm a good ways away from retirement but it really is something I should start thinking about. Thank you for this great read! voted up


moneymindit profile image

moneymindit 2 years ago from California

Wow! Great tips Cybershelley! I couldn't have said it better myself. A hub after my own heart. LOL!

MM


CyberShelley profile image

CyberShelley 2 years ago Author

moneymindit, Thank you so much for visiting and the great comment!

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