Beautiful Money By Leena Parwani
As a 25-year-old working at your first job, you may feel your retirement is a lifetime away! However, it may actually be closer than you imagine. So there really is no said time as to how early you should start planning for your retirement. But, starting early has many benefits. From being able to build up a large corpus to benefitting from the compounded interest rates, you can indeed get a lot from the retirement plans if you begin now.
Building up a large corpus effectively
Let’s say you have a box where you wish to collect AED 10,000 for charity. You go to the cubicles of your office colleges and ask for donations. You have a target of a week to fill it up, so you go along at your own pace. However, at the end of the sixth day, you realise the box is only half full. You panic and eventually pull out a fat sum from your own pocket to fill the box up.
Now imagine that box is your retirement fund. Remember how relaxed you were on the first day you began filling it up and how tensed you were towards the end of the sixth day? The same goes for retirement planning. If you begin planning early, you get more time to build up the corpus. You can make small contributions at a relaxed pace and won’t have to strain your finances or your mind unnecessarily. If however you approach your retirement and realise the fund is not large enough, you have to put in large amounts of money in one go. That will surely not be the most pleasant situation to be in! So start early and make the most of the time advantage.
If you invest early, you can continue to reinvest the small investments you make and get the benefit of the compounded interest. This will help you build up a large retirement fund even if you make small investments towards it. But remember to keep reinvesting as only then will you benefit from the wonders of compounded interest.
These are life insurance plans that also cover your life while helping you save for your retirement days. You invest in small amounts over a period of time and upon maturity (which us generally at the time of your retirement), the sum is transformed into a fund that pays out regular incomes throughout the golden years of your life. If however you die before the plan matures, your nominee gets a sum assured. The retirement plans are very popular financial products and if you have been looking to invest for your post-retirement days, such a plan may be ideal for you.