How to retire rich 101

Created by Pranav Garg / @pg2286

Why do you care?

Time

Social Security

In it's current state would not last beyond 2033.

Is this blessing in disguise?

Yes. One now have the flexibility to decide investment amount, when and where to invest.

Major hurdles
in saving

Fear

Consistency

Other hurdles

Investment options

High Liquidity - More popular

• Equity (also known as stocks)
• Bonds (also known as treasury bills)
• Money Market or savings bank account
• Mutual Funds

Low Liquidity - Less popular

• Antiques & Collectibles
• Real Estate
• Micro financing

One approach

Confused?

Don't worry we will go over it in a minute.

What's a Mutual Fund

A company who invests in buying stocks/equities or bonds of publicly traded companies on S&P or other indices.

As a consumer one just buy shares of these companies.

Whats a bond?

In simple terms its an I-Owe-yoU agreement between two parties. Is regarded less risky than equities.

Any questions so far?

FAQ's

So how much one should save?

25 times your annual salary or atleast 1 million.

How much should I save from my paycheck?

Atleast 20% from your paycheck.

When one should start investing?

As early as possible, so one can harness power of compounding.

Investment Ratio?

% of stock investments = 100 - Age
Stocks provide more growth however but they are also volatile.

FAQ's continued...

How much money can I save?

$17500 (401k/403b) and $5500 (Roth/Traditional IRA)

Difference between (401k/403b) and IRA?

(401k/403b) are offered by employers usually and sometimes they give free money away.

Traditional IRA vs Roth IRA ?

Always opt for Roth IRA as one doesn't pay taxes on future earnings.

What does diversifying means?

Buying a combination of stocks, mutual funds and bonds.

Warren Buffet Quotes

Helpful Links

• Kiplinger Personal Finance
• Compounding calculator
• Future value of dollar in todays dollar terms.(Use inflation)

Thanks Everyone

Happy Investing BY Pranav Garg