Wisdom: 4 Easy Tips to Avoid Making the Mistakes of the Masses and Save for Your Retirement

In my last post here I wrote about my general philosophies about investing in the market. You can read about it here but essentially it is about patience and confidence. That is confidence to see out your strategy and to back the market to grow over the longer term. My strategy is however a little bit more than a Kenny Rogers classic.

The earlier you start preparing for your retirement the better off you will be. We can all agree with that sentiment, the challenge is justify how saving now is worth forgoing that new iPhone and that expensive, futuristic blender which can crush bulk ice (read make summer margaritas). Well this is 2015 and there is a way to have it all, I promise. What I aim to do in this article is to share some general tips to have some investment funds to compliment your superannuation when you retire. It is important to note that this advice in general only and you may wish to consult your financial advisor to best work out a plan for your individual needs.

Firstly, a simple one to start off. Stop buying crap. That $10 toaster you bought was likely made in a sweatshop somewhere in Asia, by vulnerable workers exploited for their desperation through ludicrously low wages and unsafe working conditions. Worse still the business model exists on the basis that you’ll be back in 3 months buying the same toaster, sometimes so convinced that you will add “why spend money on a toaster when they break every 3 months”. Quality lasts, and saves you more in the long run.

The second tip is a little more difficult, avoid debt, especially bad debt. For those in Australia we have HECs, this is good debt, low interest and an investment in your future. Bad debt includes credit cards, payday loans and the scarily common car loan. A car value depreciates rapidly while you pay interest on the value of the loan, it makes no sense. If you have bad debt focus on reducing this as a priority, its better paying this off than having cash in the bank.

Thirdly, plan for the future. The earlier you build your wealth, the more compound interest you will earn in the long run. Warren Buffet is a widely quoted investor, an idol for many. Worth billions now he actually earned 99% of his net worth after he turned 50. It’s that avalanche effect that I plan on talking in a later post on this site. Set aside money from a young age, and invest it where you can get consistent returns over the longer period of time.

My fourth and final tip for this particular post is to do what makes you happy. Many people sit and say they don’t have enough money, but if you find yourself content working in your field of passion then you will have all the money you need. Better yet you will likely excel at what you do and earn more money in the long run. Gaining popularity these days is the notion that the new American (interchange with your country of residence) dream is to own your own business. If that’s your passion, your dream then go for it!

The Grey Nomad is about the advice and wisdom shared with me from a range of retirees. The mistakes they made, the success they have had. Combine that with a range of research and readings and you will get a complete view of my strategy to future proof your retirement. My next post here will be about building wealth over the long term, without the need to take on or beat the market. In the meantime if you have any questions feel free to reach out at the comments section on this page or email at mick@bluelakeinvest.co or cam@bluelakeinvest.co.