You must have heard someone say that they wish to retire at 40. A lot of people wish they could retire at 40 and spend the rest of their lives enjoying the wealth they have built. After all who doesn't want to stay at home, read books, watch films, take long vacations, throw parties and generally be lazy? Everyone wants this retired-at-40 life, but there are some people who catually work towards it and make it possible for themselves!
How to Retire at 40?
There is only one thing that stops us from quitting our jobs and taking an early retirement - the shortange of funds. If we retire, who will pay our bills, buy our food and fund the expensive lifestyle we wish to enjoy? If you dream of an early retirement, it simply means you have to work much hardder in your 20s and 30s. You need to push yourself to MAKE MONEY, SAVE MONEY and INVEST IT. These three things will define how quickly you can retire.
MAKE MONEY: It does not make sense that a family should have only one income. There should be multiple streams of income coming into the bank. Both the partners should have a day job. Any free time should be devoted to part time or freelance work. If you have any space to spare, rent it out. If you have any special skills, put them to work. Even something as basic as a gardening hobby can be monetised!
SAVE MONEY: This is the tricky bit. A lot of people make a lot of money but don't save much of it. If you wish to retire early, you cannot spend all the money you make! In fact, you should be spending only a small part of it! Stop spending on things you see your friends spending their money on. Loosen the purse strings only when you deem something as a necessity. Avoid using a credit card, opt for payments by debit card instead.
INVEST: If you successfully make money and save a big pile, it still does not make you wealthy. Money will turn into wealth only when you put it to work. In the prime of your youth, you have to take risks to make big gains. We are talking equity. With a long term outlook of two decades, anything you put into the markets will give you very good returns. If you don't feel too comfortable about investing in equity, put your money in equity funds. Mutual funds even have attractive investment plans where they automatically debit your account with a fixed amount and invest it for you. Real estate is no longer considered a good investment as there is a sort of saturation in the markets. Fixed deposits and post office investments are for the elderly. For an aggressive portfolio, equity is the way to go!
If you continue to make money, save it and invest it wisely over the two most important decades of your life, you can seriously consider retiring in your forties!