Investments to consider for an early retirement

An early retirement is one of the dreams of many people. People have such a thought to explore the world if they retire early. In order to be financially free with enough to take care of us throughout our remaining lives, it is important that we make the right investment. Apart from the investments, we have also to be sure that the following things are considered to be financially free. There are a few options available that can make us feel safe and secure after retirement.

SIP on dividend-yielding stocks or mutual funds

SIP is an important thing. People might have a plan to retire after a few years. If they are doing SIP regularly, they will be able to build enough money that aid them toward a safe retirement. SIP is usually advised on Mutual funds but I would say there are some safe stocks too that can be purchased regularly through an SIP. It is better to pick stocks that can yield dividends regularly. I personally have invested in a stock that yields me close to 15% dividends every year.

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Invest in properties for rental income

Rental income is another major earning that one can have. Having properties that can generate income is a good source of passive income. Of course, there can be some maintenance required on these properties but it is important to do real estate investments for regular rental income. After we retire our regular source of income stops. We must ensure these passive incomes are worthy enough to keep us going.

Medical emergency funds

We shouldn't ignore the emergency funds we would need for medical emergencies. Some people might have proper medical insurance to cover not only themselves but also the entire family which is very important. But in a way it is better to have some funds allocated for medical emergencies. Those funds should always be easily accessible. The first preferable choice would be to keep them as Fixed deposits that can be broken at any time when there is a need.

Corpus funds for emergency

When we plan our retirement, it may not be sufficient if we just get the salary we are getting today. We have to also consider inflation which would considerably reduce the value of what we are getting as income today. We might have to move along with the flow of inflation. This also means that our money or cash flow should keep increasing as time goes on.

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There is also a possibility that other income streams might go down. In that case, we should have the corpus funds that can help us out for a few months before we find another good income stream. If we have multiple income streams, even if one stops, we should be good to continue with the others. It is always good to be prepared for the worst.

Calculating the basic need for a low-income lifestyle

Retirement is usually when a huge part of the income is not going to come to you from the next month onwards. You have to decide about retiring only if your life is not dependent on the income from your full-time job. If you are safe to cover your basic needs without that income coming in, then you are safe to think about retiring.

Some people reduce their expenses after retirement. The main reason is that their cash flow may not be the same as it used to be before. Having a reserved lifestyle is an individual's choice because not everyone can do that and some people prefer to have a luxurious lifestyle even after retirement.

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Need for a term insurance

I personally don't prefer having term insurance. I differ from the general crowd out there. I always wanted to save enough money so that my family would get the money that I had saved up rather than getting the term insurance money if something happened to me. My idea is to boost my earnings and work to get 1 crore so that when I leave I leave them with my own money rather than some money that is brought through insurance. That's not my earning and I don't feel good about it.

The above is my ideology but in general, many people consider term insurance very important. The main reason is that anything can happen anytime and the family shouldn't suffer if something happens. It is ideal to have a decent coverage. It is usually just an expense made if nothing happens to us at all. But good to have that security done so that the worst situations are handled.

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