This used to be called retirement, you know, when after working in the factory for 40+ years, you got the gold watch, something called a pension and an extra 8 hours a day to sit by the canal fishing, walking the dog, baby-sitting the grandchildren…. Oh how times have changed.
You can still have the extra 8 hours a day, but how many want to sit by a canal fishing, walking the dog, baby-sitting the grandchildren every day?
Today, people expect greater flexibility and freedom and we are not just talking about once you reach 60. This financial freedom could be to spend time with family, pursue a passion / hobby or give back to the community via voluntary or charitable work. However, there is no such thing as a free lunch, it takes effort; therefore, without careful planning and a disciplined approach, you run the risk of not being financially independent to fulfil your ambitions. Remember, it’s not my dreams and aspirations, they are yours.
As ex-pats, we are familiar with international travel, visiting exotic locations and having made friends on an international basis would probably like to visit them after we return to our home country. This takes both time and financial security to achieve.
Working together, we’ll devise a simple and straightforward plan that is easy to maintain; one that will help to ensure you achieve your goals and adapt to your lifestyle. This strategy will include saving more tomorrow, a brilliant idea that will help you build the financial security you want.
I’ll share with you something Einstein is quoted as saying:
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
Sounds impressive, but what does it mean?
In simple terms; if your money grows at 7.2% each year, then after 10 years your money will be worth double. So $10,000 invested by a 20-year-old would be worth double ($20,000) on their 30th birthday, $40,000 on their 40th, $80,000 on their 50th and $160,000 on their 60th.
Now imagine if you saved $10,000 every year until you were 60. What could you do? You could be the one benefiting from compound interest instead of paying it. Just think what that would mean to you and your family?
There are 2 very simple reasons for making your own provisions early, 1) Governments around the world cannot afford to pay pensions to an aging population. When pensions were formed, they were only expected to pay out for a couple of years and then statistically you died. Now however, you could live another 25 or 30 years in retirement and there just isn’t enough money and 2) the sooner you understand the power of 72, which Einstein said was the eighth wonder of the world, and act, either you will be financially independent sooner, or have to save less per month.
That may have been the case previously, but as with the comment above, Governments are increasingly short of cash and it’s possible that your parents will require their savings including the value of the house to pay for their own old age and healthcare requirements.
Here in Dubai, for every year worked, there is indeed a small allowance accrued, but have you actually sat down and calculated what it is worth? In fact, after 26 years of working for the same company, you will get the maximum 2 years’ worth of basic salary. Note the word “basic,” for housing allowance and any other benefits are not included in the calculation. Now, your life expectancy in retirement is 25+ years and you have 2 years of base salary as an income. What are you going to live on for the other 23 years?
It’s understandable to put off making these decisions, especially as we were never taught in school how to plan for our financial future. Working together, I’ll help show you how to look at this from a different perspective and put a strategy in place designed to work for you.
I help international workers and expatriates plan their finances. Providing unbiased and independent financial advice, I work with many of the world's major Banks and Financial Institutions covering many areas. I offer a free consultancy meeting lasting 1.5 hours in which we can review your current financial circumstances and suggest options to you that are designed for your money to work harder for you, and in a tax efficient way.