Retirement is a concept of Financial Independence wherein you have to have amassed enough funds for you to stop working.
Remember that our bills and costs of living don’t stop even when we’re retired. Another thing to note is that the money that we have saved up for retirement needs to last us until we move on, and the best way to go about it is to invest the fund in a low-risk, almost-guaranteed financial vehicle.
In this calculator, the goal is to invest the calculated amount in an investment that will give 6% rate of return (ROR) since that is the amount that you will need every year for you to keep up with your monthly expenses. Try it out.
What to do now?
Now that you have your financial independence number, the next step is to learn and understand how you can accumulate it. The goal during the fund accumulation phase is to keep adding to the fund and growing the fund. Where to invest the money you are trying to grow depends a lot on your risk tolerance. If you know how, then you can try to manage your own investments, but you have to consider the amount of time and effort you need to have to do so. This is why the average person delegates this task to fund management houses; they leverage Mutual Funds, UITFs and ETFs.
Where to Place my Financial Independence Fund?
Once you do get to that point where you accumulated the fund, the next phase is about earning from the fund while keeping it intact. Financial independence enthusiasts usually go for Exchange Traded Funds (ETF) or low-risk Mutual Funds and UITFs to do this. What you have to understand at this phase is you still need to keep watch over your fund. You still have to move it around through different funds to make sure that you receive the right amount of return so that you can receive the amount you need to keep up with your living expenses. This goal is called capital preservation with payout returns.
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