Everyone aspires to enjoy a happy retirement.
Yet, without discipline and proper planning, it will be difficult to achieve your desired financial goals.
As our individual life spans increase, it becomes all the more important to plan early.
For context, Singapore will raise its mandatory retirement age to 63 and the re-employment age to 68 by July next year.
This move is in line with the longer lifespan of Singaporeans.
Living longer is a good thing.
But it also means that we need to ensure our savings last us well into our golden years.
According to a survey by Fullerton Management Fund, the pandemic has pushed more adults to think about retirement planning, with more than half aged 21 to 40 expecting to maximise their retirement income through investment returns.
It wouldn’t be easy.
According to data compiled by online property portal Juwai IQI, Singaporeans need around US$3.23 million to achieve financial freedom.
Financial freedom means having sufficient savings, assets and investments for you to enjoy your desired lifestyle.
It’s undeniable that investing your money is a necessary component to enjoying a secure retirement.
The question is: how do we do so in a knowledgeable and disciplined manner?
Looking for a role model
You don’t always have to walk alone in finding the right path.
Most of us will have someone in our lives who can act as a role model for us to emulate.
It could be a full-time investor, a friend who is savvy in investing or a veteran who has experienced many stock market cycles.
Speaking with these people will endow you with the knowledge to chart the right path for your investment portfolio.
Learning from mentors
It would be even better if you could pick one of these experienced people to be a mentor on your investment journey.
Those who have achieved financial freedom through investing are better placed to guide you to where you wish to be.
The sharing of their experience and journey, as well as mistakes made, helps you to refine your own investment process and avoid the pitfalls that may trip you up.
In my social circle, the few friends I have who are full-time investors are happy to share their knowledge and experience with me.
You should also scout around for friends whom you can trust to guide in investing.
By observing the way these veterans make decisions on investing and how they curate their investment portfolios, you can get a better sense of how to do so for your portfolio.
Proper temperament required
It’s also important to discern the right psychology required for long-term success.
Investing can be an emotional affair as it involves putting your hard-earned money to work.
Fear and greed are two of the toughest emotions as they can ruin an otherwise sound investment plan.
Again, you can turn to the role models to better understand the temperament that allowed them to succeed.
From my observations, I noted that discipline, patience, perseverance and prudence are traits that have served these successful investors well.
These attributes should be applied to your investment process so that you can stay focused on the right path and not be led astray.
Build up an increasing flow of dividends
A crucial aspect of being able to retire to ensure you have a steady cash inflow when you eventually stop working.
This is where dividends play a key role in providing you with peace of mind and stability.
Dividends are paid out from businesses that generate consistent, recurring cash flows.
And when the business performance improves, dividends usually also increase in tandem.
By building up a portfolio of resilient, dividend-paying stocks, you can slowly but surely build up a stream of passive income.
With the dividends received, you can then reinvest them back into the same stocks that are paying these dividends.
In turn, by owning more of such stocks over time, you can steadily increase the flow of dividends flowing into your bank account.
This virtuous cycle, known as compounding, is an integral step towards a happy retirement.
Get Smart: You’ll never walk alone
Investment knowledge need not only be gleaned from books or articles.
Sometimes, a little help from someone can go a long way towards accelerating your retirement plans.
Choosing a trustworthy friend, peer or relative to learn from can help to ease your worries as you plan for your retirement.
Knowing that these investors have already achieved success assures that you, too, can eventually attain your retirement goals.
A secure, worry-free retirement may not be as far-fetched as you may believe. In our latest special FREE report, we cover eight stocks, consisting of a mix of blue-chips and mid-cap companies, that we believe can ride the recovery and offer investors a great mix of both growth and income. Click HERE to download the report, 8 Singapore Stocks for Your Retirement Portfolio, for FREE now!
Disclaimer: Royston Yang does not own shares in any of the companies mentioned.