Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ.
This article is for all those who are counting their IRAs, 401 (k), self-directed 401k and other retirement planning options to enjoy that late-life freedom as early as 45 or 40. Financial freedom at 55 has become a thing of the past because today it all depends on your ability to take the right decisions. If your 9 to 5 life has left you drained and you are serious about an early retirement, here are 8 ways to coach you from scratch:
- Free yourself from the vicious circle of debt
The first step to securing an early retirement is getting yourself free from debt. If you do not wish to enter your early retirement with any financial lags or large payments that can eat away a massive chunk of your modest savings, you need to increase your cash flow by clearing all your debts. Paying off your mortgage or lease early will help you divert the funds into a Roth IRA or other retirement savings.
- Start living a frugal life
Saving is the only way to increase the cash flow as your career progresses and this can be done by controlling your expenses. It does not mean giving up on all your desires but only requires you to live a frugal lifestyle. A few compromises and you can save a significant amount which will eventually bring you closer to your early retirement dream. From giving up on your expensive memberships and cutting down your HVAC usage to making a few compromises in your lifestyle and sacrificing a few golf games, your day-to-day frugal acts will free you from your cubicle and give you the freedom to retire early.
- Be open to the idea of changing
Prioritize between your wants and your needs. This will help you break free from the shackles of your tiring nine to five schedule. Enjoying life to the fullest sounds like a great idea to most of us, but it also means that you are losing on the real joy of retiring at 40 for momentary happiness. If fancy dinners and long drives in luxury cars mean more to you, an early retirement is obviously out of your reach. Mindful spending needs major lifestyle changes for which you may need to give up on stylish clothing, lavish parties, exotic vacations and more. This is only possible if you change your perception of conventional societal programming which demands that you give up on your desires of bigger houses and new cars. It calls for a complete mind shift from spending to saving.
- Take a head start with a high-paying industry
It is possible to retire well before you turn 60 if you are working for an industry that pays really well right from the start. A good-paying job plays a critical role in paving your path to a financially independent future. You too can enjoy a retirement of rest and relaxation if you are willing to take up personal responsibility in professional life. Getting closer to your goal of early retirement requires you to be self-sufficient early on in life.
- Automate 50% of Your Annual Income to Retirement Savings
Allocate as high a percentage of your annual income as possible to pay up your previous debts, pending bills, leases, and loans. Once you are done with of all these, automate your income towards retirement savings. You can start with 30% and raise the bar every year as your income increases. Every time you get a raise, increase the amount you add to your retirement reserve.
- Be sure to invest in a 401 (k) plan
Many employers are offering 401 (k) plans where you can invest a certain amount of your income and your employer makes a matching contribution to bolster your retirement savings.
- Stick to a frugal lifestyle
You need to revamp your investment plan as your career keeps progressing. What you want to achieve – an early retirement is an extraordinary goal and so your efforts should be focused on living frugally. Always keep a rewarding retirement at the top of your mind and you will remain motivated to keep the passion alive and pursuit kicking.
- Invest in an IRA
An IRA is a preferred and popular choice for retirement savings. You can consult an experienced and reputed financial advisor to guide you in selecting right IRA. An IRA will allow you to enjoy tax benefits if you choose to retire early. It will get to where you want faster than you think.
Start investing right away and make your retirement the best phase of your life.
INTELLECTUAL PROPERTY IN THE AGE OF INDUSTRY 4.0
The growth of the digital era and industry 4.0 have fuelled the growth of intangible rather than physical assets, with intellectual property (IP) representing one of the largest asset classes that a company can hold and can include patents, trademarks, brands, databases, software and trade secrets.
James Turner, Director at Company Formation Specialists, Turner Little takes us through the details of why it is important to protect these assets, and how we can do so:
“IP is important, but rarely accounted for, because we most often equate value with money. It’s not always easy to evaluate its financial worth, but it’s important to create a plan to protect it.
“Businesses need to understand the source of the value and the brand of their businesses
“From a commercial standpoint, IP needs to be protected in order for companies to maintain their unique market position, but it can also have financial benefits – as it can be used as collateral for loans or company valuation in the event of a merger or acquisition.
“As industry 4.0 takes hold, we expect there to be a sharp increase in concerns surrounding the protection and ownership of IP rights. Designing the right business structure is an important consideration when protecting a company’s IP from theft, misappropriation, infringement or even potential creditors. For example, companies can limit liability through the use of holding and operating companies, which enables owners to centralise the company’s assets. Offshore companies can also be leveraged in the creation of these structures and can offer additional flexibility.
“That’s where we come in. At Turner Little, we specialise in creating bespoke solutions and structures for individuals and businesses of all sizes. Whether you’re a small business owner or own a large plc, it’s important to ensure that your IP is secure, so you can focus on building a successful business.”
STOCK MARKET ANALYSTS DISCUSS HOW TO INVEST DURING A RECESSION
- Online tool looks back at how world markets recovered after the last recession in 2008
- Analysts take learnings from previous recessions to offer insight on how to invest during a period of instability
- Certain areas of the stock market can increase in value during a recession
The economic crash due to Covid-19 is a unique event, however stock market experts have taken learnings from previous recessions to predict the stocks that may increase in value during this time.
IG Markets, Europe’s largest online derivatives trading provider, has taken learnings from previous recessions, using historical data and online tools such as Decade of Trade, which visualises world stock market trends over the 10 years since the 2008 crash, to provide predictions about the areas of the stock market to watch during an inevitable recession.
Stocks to watch during a recession
Under expansionary circumstances, stocks that have strong growth prospects such as healthcare and consumer staple sectors, for the future typically command lofty valuations and produce high returns, as investors bank on the company’s ability to generate more income as time progresses. This phenomenon typically results in high price to earnings (P/E) ratios like those currently present in some of the market-leading tech stocks.
In the event of an economic downturn, however, these profit-hopeful stocks are often discarded as investors align their income assumptions with slowing growth and lower consumer spending.
On the other hand, stocks with stable – but often more modest – income generation tend to be more insulated from dramatic stock shocks that frequently accompany recessionary periods. These stocks are known as “defensives” and, broadly speaking, include the utility, healthcare and consumer staple sectors. Given their profitability profiles, they become an important collection of stocks to keep an eye on when the broader market encounters a rough patch.
Consequently, a portfolio comprised entirely of equities is remarkably vulnerable in times of recession, particularly at the onset when losses are often steepest. With that in mind, it may prove beneficial to look outside of the equity market for some of the best recession-proof investments.
Gold can be an investment during a recession
XAU/USD is widely regarded as a safe haven asset for its stable store of value and tangibility. Further still, gold can act as an inflationary hedge, making it an attractive investment in times of recession and in periods of lower interest rates when inflation may threaten to take hold. Gold has demonstrated an almost innate ability to retain its value during contractionary periods, thus making it an attractive investment in times of uncertainty.
The US dollar: an attractive currency during recessions
Sharing similarities with gold, the US Dollar also boasts safe haven attributes. Due to its role as the world’s reserve currency and the backing of the world’s largest economy, the US Dollar is both incredibly liquid and sought after. Issued by the Federal Reserve, the Greenback is arguably the safest currency in the world and has become a quasi-currency of exchange in many nations where domestic currencies have had their purchasing power fall, due to inflationary pressures or other economic woes.
Consequently, holding US Dollars during periods of uncertainty or turmoil is often viewed as an attractive alternative to other assets. Evidenced in the Great Financial Crisis when the United States dragged the rest of the world into a global recession, the US Dollar surged almost 25% during 2007 to 2009 even as the Federal Reserve lowered interest rates to the floor.
The Dollar’s strength was largely owed to the fact that the Federal Reserve possessed ample liquidity and the US economy was soon in a position to recover while others were mired in recessions – some of which have never fully recovered.
Joshua Warner, Anaylst at IG Markets, said: “While there is a strong argument that a global health pandemic like Covid-19 has been on the radar of governments and institutions for decades, the lack of preparedness of most governments and businesses shows how unprecedented the current situation is.
“It is almost guaranteed that the UK will enter a recession in the coming months. The Bank of England (BoE) has said it is likely to be the sharpest one on record, while Chancellor Rishi Sunak has warned it will be a ‘severe recession the likes of which we haven’t seen before’.”
Peter Hanks, Junior Analyst at Daily FX.com, said: “With the benefit of hindsight and the lessons of the three most recent recessions, it can be argued the best recession investments are not stocks at all, but rather assets that retain their value even as growth slips. Therefore, if equity exposure is a must-have in your portfolio, the US Dollar and gold should also be given consideration – particularly for the risk-averse investor or one who suspects an impending recession.”
To learn more about the stock market over the last 10 years to understand future trends, please visit: https://www.ig.com/uk/special-reports/decade-of-trade
INTELLECTUAL PROPERTY IN THE AGE OF INDUSTRY 4.0
The growth of the digital era and industry 4.0 have fuelled the growth of intangible rather than physical assets, with...
2020: THE YEAR BLOCKCHAIN COMES OF AGE
– By Rob Coole, VP of Cloud Technologies at IPC Despite headlines over the years stating that blockchain will...
AI IN THE FINANCE SECTOR: WHAT’S NEXT?
By Rui Vasconcelos, Product Manager for AI/ML at Canonical – the publisher of Ubuntu The last few years have...
6 STEPS FOR BUSINESSES TO ENSURE THAT THEY ARE DATA COMPLIANT
By Alex Hazell, Acxiom UK head of legal Data compliance can be a complex – and ever changing – consideration...
INNOVATION WITHIN TIME
By Richard Hoptroff, CTO and Founder, Hoptroff The Finance Industry has always been quick to innovate, from the ATM...
COMPETING IN A DIGITAL WORLD – SMES FIND THEIR FEET
– Stefano, Product Manager Digital transformation is different for small and medium-sized companies. Or is it? In this article, we...
DATA-DRIVEN BUSINESS OPERATIONS ARE A MULTI-YEAR PLAN FOR TWO-THIRDS OF FINANCE PROFESSIONALS
Data-driven business operations are a multi-year plan for two-thirds of finance professionals (66%). Only 7% think their own organisation is...
AI: CUSTOMER FACING EMPLOYEES’ BEST FRIEND IN THE FINANCIAL SERVICES INDUSTRY
By Ryan Lester, Senior Director, Customer Experience Technologies at LogMeIn We’ve all heard the old saying “money talks.” Well...
HOW IDENTITY IS SECURELY UNLOCKING THE SME BANKING MARKET
By Mike Kiser, senior identity strategist at SailPoint Have an identification card in your wallet? With a selfie and a...
FIVE REASONS WHY YOUR BUSINESS’ PROCUREMENT TEAM SHOULD BE USING A CONTRACT MANAGEMENT SYSTEM
By Daniel Ball, business development director at Wax Digital Even in today’s digital-first environment some businesses are still storing...
EXEGER – CHANGING THE PERCEPTION OF POWER
FINASTRA GLOBAL SURVEY SHOWS APPETITE FOR OPEN BANKING PICKING UP PACE WORLDWIDE
86% of global banks surveyed are looking to use open APIs to enable Open Banking capabilities in the next 12...
STOCK MARKET ANALYSTS DISCUSS HOW TO INVEST DURING A RECESSION
Online tool looks back at how world markets recovered after the last recession in 2008 Analysts take learnings from previous...
PROTECTING YOURSELF AGAINST A RECESSION
James Turner, Director at Turner Little The coronavirus outbreak has spread to businesses, leaving many around the world counting...
LIBERTY BANK REINFORCES ITS FRAUD STRATEGY TO FURTHER PROTECT ITS CUSTOMERS
Liberty Bank, the third largest bank in the Georgia, has reinforced its fraud strategy to address the rising volume of...
COMMERCIAL FINANCE SPECIALIST IGF NAVIGATES THE LOCKDOWN
Leading independent commercial finance specialist, Independent Growth Finance (IGF), entered the lockdown after a record-breaking financial year came to an end in March. In April, it was accredited by...
COVID-19 WILL BE THE TIPPING POINT FOR DIGITAL TRANSFORMATION IN PROCUREMENT
Seven in ten organisations in the UK say the global pandemic has increased the need for procurement to digitally transform...
TRIO OF NEW REGIONAL DIRECTORS HEAD UP TIGERWIT’S GLOBAL EXPANSION
Following the release of their record revenue for the last financial year, award-winning online trading platform, TigerWit, has strengthened their...
SECURING THE EVIDENCE FOR VAT AND TAX
Filippa Jörnstedt, Senior Regulatory Counsel at Sovos Businesses are almost entirely digital in their nature. With sophisticated technology now...
TIPS TO PROTECT YOUR CASHFLOW DURING THE COVID-19 PANDEMIC
By Rita Cool, Certified Financial Planner at Alexander Forbes Financial Planning Consultants The full impact of the COVID-19 pandemic is...