Ways To Begin Saving For Retirement

Just started this blog post to share some of the key ways to start saving for retirement that I have been able to find online.

How's your retirement fund going along?

(Image source: http://www.bankingsense.com/how-saving-slowly-over-time-builds-your-retirement-portfolio/)

1. Transfer part your salary to a separate bank account

Getting the bank to transfer a small portion of your salary (maybe 10%) is a good way to start saving for the future as you won't miss money that you never received right? From this bank account, you can start investing in bonds, stocks and many other financial instruments to start growing this sum.

2. Reduce costs on daily habits

For example, going out for breakfast, going buying that Starbucks drink before work, these little costs add up. If you spend around $5 on these little treats and snacks daily, that's $150 monthly and $1800 annually. This amount, compounded annually at a rate of 7% (a rough estimate on the return of the STI, including dividends, for the past 25 years), amounts to $170,000 after 30 years. These small treats do add up and cutting down on them is one of the best ways to start saving for retirement while not affecting your standard of living.

3. Start young

Understanding the value of compounding is important to starting to save for retirement. Assuming the same 7% return rate $1000 when you're 20 grows to $1960 when you're 30 and $3870 when you're 40. When you're 65 this would have grown to $21000. Hope this information would encourage you to start saving for retirement earlier

4. Waiting at least 24 hours before acting on an impluse

If you are still able to remember the purchase decision 24 hours later which is unlikely, you will be much more rational when approaching the decision than in the moment. This exercise helps to reduce impulse purchases that waste money and that you will likely regret in the future.

5. Invest your savings

Investing your savings in shares, bonds or even a fixed deposit will get you better return than leaving it in your savings account. As mentioned earlier in this blog post, starting early is key to letting your savings grow through investing and the magic of compounding needs time to work, so starting to save and invest early would give this time necessary to grow a tidy retirement fund

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