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The 3 Most Important Rules for Effective Retirement Planning

By Guest Author On June 6, 2011 Under Setting Goals

Effective retirement planning does not have to take on the alure of rocket science. In fact, there are 3 rules for retirement planning that can almost guarantee that you’ll have the funds you need, available for your retirement when you need them. The problem is that despite the fact that there are only 3 simple rules, many people still fail; to follow them, and thus are doomed to scaping by through their retirement, instead of living the life they want. Read the following three tips, and your chances for an enjoyable retirement increase tremendously

First, you want to start saving early. That is the number one mistake made by people in their retirement savings . Why does it make such a difference that you start your savings plan early? One simple word; compounding . Compounding is how money grows due to the fact that you earn interest on your interest. That will start of as relatively insignificant, but throughout the years can make small contributions result in your amassing a fortune in retirement savings . Make sure and do that the right way . If you do so, your retirement nest egg is all but guaranteed to grow to proportions you could have barely dreamed of at the start of your journey , and you’ll be in a good position to finally stop working.

If you don’t follow this simple rule, chances are you’ll be living on what all too many people have to live on after they retire; their Social Security stipend, and asking “Would you like to Supersize that ?” That’s not the way too many people want to spend the last years of their lives .

Many people start off all wrong by waiting until they are in their thirties or forties to start saving. Many people fall prey to this, and it continues to be the achilles heel of retirement planning, for once you wait 10 or 20 years to start saving, you may never catch up. This holds true even if you were to have started saving early, then stopped your contributions after 20 years. That turns out to be a far more successful strategy that starting your contributions late.  You simply won’t have enough time to take full advantage of compounding, and you could have a problem with reaching your savings goals.

Second, you will want to contribute regularly. This is very important, will likely be crucial in determining whether you succeed or fail. Regular contributions are   also important for these 2 reasons: One is psychological. You want to get into the habit of regularly putting money away, so that you don’t miss it . The other is because missing regular contributions will hamstring your savings progress . You could have a large mountain to climb, and may never reach the top . Instead, you may have to rely on finding the most picked winning lottery numbers instead, and that’s not a very sound retirement strategy .

Diversification is the third tip that can make or break your retirement savings . Diversification effectively protects you against economic or business conditions that can easlly have adverse effects on a single industry or business that you may have invested in . It is very important that you follow this tip, because failing to diversify your holdfings can leave you vulnerable and you could easilly lose everything when economic or business conditions decimate your accounts .

This is how diversification can help protect your retirement savings : If you put all of your savings into oil stocks for instance, sudden action by the government, competitors, or a new technological development may cause your assets to possibly severely, or at a very inopportune time . Even the best run company can experience troubles they can’t extricate themselves from. That is the reason not to put your savings in a single company’s stock . Although many people are guilty of this mistake when they have all of their retirement savings in their company stock plan. If your company has problems or, heaven forbid, goes out of business, your retirement savings will be wiped out. Just ask all of those unfortunate people who worked for Enron .

You want to go even further than investing in multiple companies though . To achieve effective devirsification, to the extent that your retirement is adaquetely protected, you have to go even further . For example, having some of your assets in commercial real estate, some in energy stocks, some in communications stocks, a portion in municipal bonds, and even more in food producer’s stocks, with a bit of your holdings in precious metals will have you effectively diversified, so that no one thing should conspire to ruin your savings.

Follow these three suggestions for effective retirement planning and you’ll in all likelihood succeed and enjoy all of the rewards and benefits that effective retirement planning would bring you . Ignore them and the prediction is not good . The choice is yours… follow them and reap the benefits; ignore them and you simply will most likely not. The choice is yours; lucky lotto numbers, or effective retirement planning. These tips are so easy to follow, especially is you start early,and make them a habit, that it would be a shame to cheat yourself out of your future, so make the right choices now, and enjoy your future later …

Discover strategies to easily, yet effectively save for your retirement, and not be left out in the cold during your golden years. One of the skills you’ll need is investment evaluation, or how to pick winning investments. Discover little known strategies to do just that at  at our How to Find Good Stocks to Invest In site a:

http://opportunitiesaplenty.com/Debt_Blog/2007/12/_good_stocks_to_invest_in_how_to_find_th.html

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