Many people dream of their retirement, picturing the ultimate freedom of not having a job yet having plenty of money to do whatever they want. If you can retire early, you’ll have more youth and energy to enjoy it, and you’ll also have more time to do all the things you want.
But what strategies are going to help you in this pursuit?
Strategies That Can Help You Retire Early
These are some of the best strategies that can help you retire early.
1. Start now.
Start preparing for your retirement and financial future more generally right now. If you’re truly an “under 30” CEO, you’ll have 40 years or longer to accumulate savings. With the power of compound interest, even modest investments growing at a modest interest rate can lead you to a crazy amount of wealth. And if you’re older than 30, don’t worry; it’s better to start late than not at all. Don’t procrastinate planning for your financial future.
2. Consider working with a financial advisor.
Financial advisors are a great resource if you don’t have much knowledge or experience with investing or financial planning. They can help you set the right goals for yourself, make the right types of plans, and optimize your savings and investments to achieve whatever you want to achieve.
3. Live below your means.
No matter what, you should live below your means. Whatever you make in your business, consider living on less. If you can survive on a modest amount of money, you can use the remaining proceeds to save and invest in your future. For example, if you make $80,000 a year and live on only $60,000 a year, you can save $20,000 a year for your future.
4. Pay off your high-interest debts.
With your excess money, prioritize any high-interest debts that you have. This is valuable because compound interest works both ways; it can cause your debt to spiral out of control if you aren’t careful. The sooner you get rid of your debt, the sooner you can start putting all your excess money in your savings and investments.
5. Utilize tax-advantaged accounts.
Even if you plan on retiring early, utilizing tax-advantaged accounts is a good idea. These special investment vehicles allow you to circumvent certain tax rules, saving you money and/or allowing you to invest more.
6. Invest in a mix of assets.
You’ve likely heard the advice to diversify your investment portfolio. That’s because it’s some of the most important investment advice out there. Diversifying a portfolio means investing in many different things so you aren’t subject to any disproportionate risks or potentially catastrophic losses. Invest in a mix of different stocks, real estate, bonds, and other assets to make sure you can secure a reliable rate of return and keep your portfolio safe at the same time.
7. Commit to regular savings.
Make sure you have a plan for how much you’ll save and when you’ll save it. For example, you can treat a monthly savings amount of $1,200 as an expense so you prioritize it. The more consistent you are with this practice, the better.
8. Create separate streams of revenue.
It’s also a good idea to create multiple streams of revenue, both for yourself and the present moment and for your future self. Having multiple streams of revenue means increasing the amount of money you make but also increasing the stability of your financial situation since the failure of any single stream won’t be too disruptive. In addition to your business, you can pick up side gigs and make investments capable of generating revenue, like investments in dividend stocks or rental properties.
9. Develop an emergency fund.
Everyone should have an emergency fund in place. It’s especially important for business owners who might not have consistent income. With an emergency fund in place, you won’t need to tap into your investments or retirement accounts if you face unforeseen expenses.
10. Understand your long-term vision.
Finally, make sure you know what you’re working for. How much money will you need to retire early? And how are you going to achieve that target while minimizing risks in the process?
Finding the Balance as a CEO
As a CEO, you’re going to have your hands full on a daily basis. Accordingly, your personal finances might take a back seat. However, it’s critically important to prioritize your financial future if you want to accumulate wealth and be successful in the long run; even if you only dedicate an hour a week to financial planning, researching, and improving your investments, you’ll be in a much better position.
