5 Things to Do When Investing If You Want to Retire Early

Plan for retirement without relying on others

When you have a detailed and clear plan, you will have a peaceful and prosperous retirement, avoiding leaving things to chance and having to rely on others. So when setting up a financial plan, what is the first thing to do? Talking to Lao Dong, Mr. Ngo Thanh Huan - CEO of FIDT Asset Management Joint Stock Company - said that you should consider and analyze your current financial situation as well as your short-term, medium-term and long-term financial goals. At early retirement age, the following important factors need to be assessed:

What are the types of active and passive income sources in retirement? (Stability and growth of income are also important.) What are your expected expenses, with particular attention paid to health care and travel costs?

Are there any changes in lifestyle, place of residence… that will affect the expenses incurred? Expected inheritance received and bequeathed to relatives? What are the future financial goals? What are the current assets, outstanding debts? And finally, are there any risk prevention plans?

According to the expert, the average life expectancy of Vietnamese people is currently around 75 years old and may be higher. Therefore, we need to prepare financially to enjoy a prosperous old age for at least 30 more years by creating a financial plan for retirement. Do this by creating a cash flow over time for the entire expected life cycle, thereby showing:

Income sources over the years, taking into account the potential for income growth. Personal spending needs (taking into account inflation and lifestyle inflation at specific periods). Other money-related goals also factored into cash flow. It is important to track and update results, investment status and asset growth.

"Through financial planning, we can evaluate the feasibility of the plan. If not achieved, we need to adjust our financial goals when retiring. This is not only to see the financial picture but also through which we can take steps to invest, save, and restructure assets at necessary times" - Mr. Huan shared.

Grandfather — Mr. Ngo Thanh Huan believes that each person should assess the feasibility of their retirement plan, then take steps to save and restructure assets when necessary. Photo: Duc Manh

Before investing, you need to set up a reserve fund.

According to Mr. Ngo Thanh Huan, before investing, you need to set up a reserve fund for 6-12 months of expenses, then save for a 1-month term to ensure unexpected needs in spending, medical treatment, etc., if any. The reserve level will be high or low depending on the income level and the stability of the income. If you do not prepare a reserve fund, when you need money, you have to sell assets quickly, then you have to sell them at a low price, causing instability for retirement age.

In addition, investment profits must ensure a steady cash flow. Investments should be directed towards safe channels with stable profit performance. Limit investments in high-risk investment channels with large fluctuations in profit margins. The investment portfolio also needs to be diversified to spread risks, and at the same time, always be ready with risk prevention plans if any.

The Smart Finance program is jointly produced by Lao Dong Newspaper and FIDT Joint Stock Company - Investment and Asset Management. The video series is broadcast at 7:00 p.m. every Thursday with the participation of leading prestigious financial experts sharing knowledge and skills in personal financial management and investment with readers/viewers!

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