From My Desk
Date 18-May-2014
Subject Busting common investor myths on money matters - series 4
Details Myths > "I don't have to save for retirement so soon"

Reality > Missing the initial years can rob your corpus of the magic of compounding.

A NEW car, the latest smartphone, foreign holiday... when young people start earning, saving for retirement is not among the options they tick. Why just the young set, even those who are well-settled in their careers believe that retirement planning can wait. They argue that they will be able to save enough later when they start earning more. But delaying the start can prove costly.

The longer you stave off saving for your golden years, the harder it will be for you at the end.
If you delay retirement planning by 10 years, even a higher monthly saving will yield a smaller corpus than if you started early at 30. The delay denies the retirement corpus the magic of compounding. What you save in the first few years of your career makes up a huge chunk of your retirement corpus.

One reason people don't take retirement planning seriously is that they are still living in the past. They believe that their children will take care of them when they are older. But society is fast changing. In metros, joint families have already become exceptions rather than the norm they were some two decades ago. Also, relocating to another city for work is common now. So, don't lean too much on that hope.

A common fallacy is that "things will work themselves out in the end". If you are also among those who believe that you will cross the bridge when you get there, it's time to change the mindset. Start saving for your retirement now if you don't want to spend your sunset years in penury.
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