by Lyndon W

Created on: August 10, 2010

Many people aim to retire comfortably, or proclaim the want to retire early. Yet out of these numbers, few have the knowledge to plan ahead adequately. Building a fortune for your retirement should not be of a hassle once you get the basics right and going. First things first: Plan the age that you intend to retire. Plan how much you would need to retire. These two factors alone should prove to be a headache for most people.

Review your current job now. When was the last time you upgraded your skills? Employers are very receptive of workers who are continuously upgrading and improving themselves, thus translating to additional value at work. Depending on the economic conditions, and considering your career progression in your current employment, jumping ship to another company that has more prospects may not be that sour of an idea as well.

Take on additional part-time employment. When you are young and still energetic, what is stopping you from seeking additional work to supplement that fortune basket? Many a careers can take on additional related work with experience, for examples, engineer can provide consultancy outside, lecturer can give group tuition to kid, etc. The possibilities are endless. However, do check with your current company if moonlighting or working outside your office hours is allowed.

Setting up a Savings strategy. Many people make the mistake of spending their disposable income first, before saving up what little is left. A good idea is to set aside a fixed percentage of your monthly salary before making decisions to spend. It is also a good idea to spread your savings among current savings and fixed deposits. Being prudent in leading a non-extravagant lifestyle is also crucial in this aspect.

Invest, and diversify your investment portfolio. Savings alone is useless by itself. With the rate at which inflation is going, the low interest rates that your local bank is giving you might be eating up your savings over time. To diversify is to spread your risks over several different classes of financial instruments. These include Bonds, Local Bank preference shares, Unit trusts / Equity, Structured Deposits, Stocks, etc. Investing is akin to shopping at the market. Consider several factors, which may include suitability, affordability and comfort.

Depending on your age group, and your financial goals, these will determine your basket mix of risks. As a rough guide, the younger you are, the more risks you are able to take up since you have time to ride the ups and downs of the market and economic fluctuations.

For example if you are in your early twenties, consider this: 85% equities, 10% bonds and 5% cash. A person on the other hand in his forties may opt to emphasis on safer instruments: 50% equities, 40% bonds and 10% cash. The more investment savvy folks might consider additional classes of more volatile instruments which comprises of art funds, derivatives and hedge funds. However, it is prudent to limit your exposure risks to this area.

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