You've probably heard many of these common pieces of retirement advice before, but they’re worth repeating, if only to remind you to take action. After all, the key to a comfortable retirement is not to know every possible secret to build wealth, but to simply act on the knowledge you already have. Here are the most important actions you must take in order to reach a worry-free retirement:
Take steps to live below your means. You can be an investment genius, but still not be able to amass a sizable nest egg unless you have a solid base to compound your returns. For most people, the biggest determinant of how much money you can accumulate is how much you save. The more you can save each month, the more you have for the future. It's that simple. And the best part about not worrying about the Joneses is that eventually, you will actually be the Joneses.
Determine an appropriate asset allocation mix for your circumstances. The biggest benefit of coming up with a well thought out strategy is being able to stay the course when your investments do not perform well. "Buy low and sell high" is easy to say, but too many people will find it impossible to execute in the heat of the moment unless they truly understand their asset allocation strategy and how different investments are interconnected.
Ignore short-term market fluctuations. Any investment can be volatile in the short run, but most investments tend to increase in value over the long haul. Your investment in stocks, for example, will be worth more as the underlying companies make more money and throw off dividends. Your bond allocation, on the other hand, will throw off coupon payments to honor debt obligations. By investing as early as possible, you are allowing the forces of investing to work in your favor. Of course, compound interest won't hurt either.
Realize that money is just a tool. Many people in modern society are trained to think that more is always better. The result is a world with too many people who are willing to trade a great deal for more money. They work for too long, and often at jobs they absolutely hate. They spend too much time thinking about their assets, and not enough time building relationships with their friends and family. At the end of the day, your non-financial assets are at least as important as your financial ones. Don't let money concerns dictate your life and drive all your decisions. More money isn't always better. Sometimes, you need to decide that enough is enough.
Surround yourself with people who share the same values. The road to financial independence will be next to impossible unless you find others who also believe in marching toward the same path. Find a significant other who won't sabotage your efforts to prepare for a better life, and find friends who can be supportive of your ideals. They are out there, and chances are good that they are looking for you too.
None of these financial tips should be surprising. The important part is to begin to implement them as early as possible in your career.
David Ning runs MoneyNing, a personal finance site that shares money moves you can make to significantly increase your chances of having a comfortable retirement. He likes to share simple changes that anyone can make, such as picking the best online savings account and figuring out whether a 0 percent balance transfer credit card makes sense.