2. Retirement Plans or FIRE ... - Deepstash

2. Retirement Plans or FIRE

Most of the people who invest money do it to live a comfortable life after retirement. As a huge portion of people solely relies on salaries, it becomes a challenge to sustain their lifestyle when it is time for retirement. This means everyone has to understand the importance of investment decisions within their lifetime. Many millennials have made it their goal to FIRE (Financial Independence, Retire Early). Saving a major part of your income, around 70%, can lead you to retire early while living a comfortable life.

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MORE IDEAS FROM Why Investing is Important for Every Individual

Why it is important to invest

1.Higher returns of investment

Once you’ve come to know the importance of investment decisions, you’ll understand the variety of investment options available. Investing funds within an asset include a trade-off as the investor goes through the maturity period in the present to gain something of greater value in the coming future. For example -

Stock investment can give you returns in two ways - One is capital gains, and the other is in the form of dividends.

Real estate investment can give you steady income in the form of capital gains and rent.

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The importance of investment decision

What is investing?

Investing is not a ‘one size fits all’ game. It can mean different things to different individuals. For some people, it can mean securing future benefits such as their health or skills, while for others it may be a means for generating income from profits. It generally means putting funds or capital into a multitude of assets in the hope that you will gain some kind of profit or returns from them in the future.

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  • Create a full inventory of expenses in front of you: Categorize them into fixed and variable; urgent and non-urgent; necessities and luxury; avoidable and unavoidable.
  • You can create a hierarchy of needs and decide which one’s to address first. It’s all about prioritizing. 
  • Accept that you have limited resources and unlimited wants. But you have to manage your resources. The sooner you accept this fact, the better you can control your impulses towards avoidable expenditures.

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 Investing defined

Investing is about laying out cash or assets now, in the hope of more cash or assets returning to you tomorrow, or next year, or next decade.

Most of the time, this is best achieved through the acquisition of productive assets.

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Both saving and investing are important, but they are not the same. While both can help you build a more secure financial future, customers must understand the differences and know when to save and when to invest.

Savings are usually placed in low-risk savings account. Those looking to optimize their earnings should aim for a savings account with the highest annual percentage yield (as long as they can meet the minimum balance requirements).

“First and foremost, both include saving money for the future,”

Both savers and investors recognize the value of getting capital set aside.

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