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Investing For Retirement

Planning to retire can be a little complicated. Especially if you have student loans or start late, it can be challenging to plan a successful retirement. These days, it is even more challenging. With rising inflation, food prices, rent and the prices of other necessities, a retirement plan might not be your highest priority. However, as complicated as it is, it is crucial to start planning and saving up as quickly as possible.

When should I start saving up for retirement?

Even in your early 20s, saving up for retirement is crucial. The earlier you start, the better. Even if you cannot afford to save much, it will give you a substantial return on your investments if you start early, no matter how little you start with. You should create a retirement plan and start saving up as early as possible.

How much should I invest?

It would be best if you aimed to invest as much as possible. However, a general rule of thumb accepted by most people is to invest at least 15% of your annual income if you can afford it.

If you live in the US, you should be looking to have saved at least 10x your current income by the time you are retired. Ideally, you should have saved at least 1x your income by age 30, 3x by age 40, 6x by age 50, 8x by age 60, and 10x by age 67 (full retirement age in the US).

Where should I invest?

Your investments generally depend on how much risk you are willing to take. However, you should aim to have an appropriate balance between stocks and bonds with a small percentage in speculative assets if you are okay with the risk. However, lower risk assets are preferred as your retirement is a long term plan.

If your employer offers a 401(k) plan, you should try and max it out as it reduces your taxable income. This depends on you can afford it, but you should invest as much as you can as early as possible.

Compound interest and why you should invest early

Through compound interest, you can get interest on top of your interest. Compound interest grows exponentially with time. This is why the earlier you start investing in your retirement, the better. You're getting better returns on your principal by investing early, even if you don't invest as much in your later years. In compound interest, time is vital.


Retirement is critical, and you should start saving up and investing as soon as possible. It might be daunting. However, with early planning and a good strategy, it can be achieved.

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