5 Ways to Not Retire Early

The internet is awash with people telling you about the best tips in which you can retire early and what steps you should take so that you can achieve this sooner rather than later. In this short article we look at the things everybody shouldn’t be doing but yet millions still are.

Procrastination

Knowing that you have plenty of time ahead of you is one of if not the biggest driver in people failing to put a retirement plan in place. Procrastination is the habit of delaying an important task, usually by focusing on less urgent, more enjoyable, and easier activities instead. Setting yourself a deadline for starting to plan for the future is part of the battle but making sure you follow through is the most important step. For those of you unsure of the best time to start, it is always yesterday, and the next best time is right now.

Giving up at the first attempt

Giving up at the first attempt is another sure-fire way of giving up your dreams of a perfect retirement. Maybe you’ve dabbled it in the past and a bout of market volatility gave you cold feet. Or perhaps earlier in your career and your priorities changed when you needed to buy a house. Or maybe you just set yourself unrealistic targets. The key is to only invest what you can afford, often as your career progresses your salary will increase giving you the power to contribute more. However, by starting to consistently contribute to a long-term plan, no matter how small can result in you needing to invest less over time.

Waiting for the right time to start

As already mentioned, the best time to start investing is always yesterday. This is because when it comes to investing, it isn’t so much a question of timing the markets, it’s more about your time in the market that counts. We would all love to hold off and invest when markets are lower, but without a crystal ball it’s not really an option. Investing is all about thinking long-term and having a position in the market. A minimum of at least five years, but the longer the better.

Relying on others

Following other people, more commonly known as herd instinct is when an investor follows a group under the belief that they have done their due diligence, and so copy what they have invested instead of researching and doing their own analysis. It is human nature to follow the crowd and safety in numbers comes to mind, however, usually the more people in these types of groups the more wary you should be. This is when herd instinct is most likely to create asset bubbles or market crashes through panic buying and panic selling.

Examples of herd instinct go back as far as the tulip buying frenzy of the 17^th century. However, a more recent example would be back in 2021 with Robinhood and GameStop. This was when a group of investors decided to go against investment firms that often shorted certain stocks in order to increase their prices and so too their investment. For a few weeks GameStop’s price increased rapidly and at one point became the most traded stock on the S&P 500. This however stopped when trading platform Robinhood suspended trading. 

Being Scared To Invest

‘Past performance must not be taken as any guide for future returns. The value of investments and the income from them can go down as well as up’

As the disclaimer above explains, perhaps the only guarantee with investing is that it comes with a risk.  However, lets flip this on its head.  If you are sceptical about the risks associated with investing, ask yourself, ‘what am I risking if I don’t invest?’

Here are a few quick answers to that question:

• By leaving your money in the bank earning little interest, you risk its value being eroded by inflation.
• You risk missing out on compound interest. Which is the interest you earn on interest.  Allowed to accrue over a long period of time, this ‘eighth wonder of the world’ can make a big difference to the size of your retirement pot.
• And finally, by avoiding the risk of investing today, you are increasing the risk of outliving your wealth.

So, by avoiding the risk of investing today, you’re in turn running the risk of outliving your money.

Therefore, wherever your journey to your dream future and retirement may take you, it is important to remember that our experts at Skybound Wealth are on hand to wherever you are to help you achieve your financial goals. Reach out to us today so that you can reach your future.