When meeting new graduates and asked if they start planning their retirement? The answer is often said "Not yet the time" or "Now I just started working, not the time yet".
 

If you think that today is not yet time to start your financial planning for retirement age and money for expenses at retirement age is not much to prepare, you need to reconsider.
 

Because today Thai people live longer, so the expenses after retirement age are quite high.
 

Hence, one of the key solutions to getting enough money for living after retirement is to start planning your retirement as soon as possible. Because if you start early, your life is highly flexible, such as spending a small amount each month since there is a long time to invest

Example: If you want to have a savings of 1,000,000 baht at age 60

At present, at the age of 25, monthly savings of 2,381 baht is needed.

At present, at the age of 35, monthly savings of 3,333 baht is needed.

At present, at the age of 45, monthly savings of 5,556 baht is needed.
 

From this example, there is a difference in money-saving at the different ages. For example, people at 25 years old still have other 35 years to save money. It is possible for them to save little by little when compared to old age to have to collect more money each month.

In addition, the advantage of investing early is that there are various investment options because young people can accept a higher risk compared to older people. And if the new generation wants to make a successful financial plan for retirement age, they can start from 5 factors as follows;

1. Provident fund
 

Young people can use this provident fund as a starting point for planning their retirement, that is, they should maximize its benefit by accumulating money into the highest level of funds permitted by the company. The law stipulates that the accumulation of 2 - 15% of the salary and the money contributed by the employer (company) to the fund. That is called the company’s contribution which will be according to employees’ service years which may be less or more than the accumulated money.

Therefore, if the company has a selectable savings rate, such as 3%, 5%, 10% or 15%, you should choose the maximum savings rate that can be chosen, 15%, and another employer contribution. This will benefit those who are provident fund members.

2 . Do not create debt more than your income
 

The new generation or those who just start working are people who use the money to meet their own needs, such as shopping, traveling, which cause excessive debt, especially bad debt. It is the debt that is borrowed for consumption. So, in order to reduce the problem of insolvency from a young age, they should focus on debt creation which each month should have debt that is paid in total no more than 35% of income. For example, a salary of 20,000 baht should have a debt payable, not more than 7,000 baht, which means that 7,000 baht for both good debt and bad debt.

3 . Reserve money for a rainy day must be sufficient
 

Everyone should have a sum of money to save for emergency use, at least for 3 - 6 months of the cost each month. You should explore how much you cost each month. If the salary is 20,000 baht, the cost is approximately 10,000 baht. It is supposed that you want to have an emergency reserve savings of 3 times the cost, then you should have at least 30,000 baht to use when necessary. If you want to have 6 times the emergency savings in reserve, it means that there should be no less than 60,000 baht for emergency use.

4. Automatic investment
 

The main reason why young people or startups ignore financial planning is they still have low incomes which is a misunderstanding. In fact, financial planning is directly related to everyone at all levels of financial position.

If the income is low, people can use the investment method of cost average (Dollar Cost Average: DCA), which is a systematic investment with an automatic deduction from the bank account to invest. In this way, people will achieve their financial goals and also create their discipline to invest.

5.Dare to take risks
 

If considering the acceptable risk level in terms of investment attitude, age, and loss tolerance, it was found that young people who have not much burden, have a longer investment period. And they are able to accept high investment risks, so the investment portfolio should be aligned with the level of risk and investment goals.

Examples of 5 portfolios

Portfolio management depends on your financial goals and your risk tolerance. Someone who is young or just start to work should focus on aggressive investment strategies and invest in high-growth assets. When you get older or approach retirement, you should focus on passive investment strategies, focus on safety and reduce the risk.

1. Highly aggressive portfolios
 

It is an asset allocation for investing with a high level of risk with a focus on investing in stocks.

Example:

45%: invest in blue-chip stocks which are stocks with a large market capitalization (market cap), such as stocks in the SET50 index, high liquidity, strong fundamentals, stable business operation. The performance continues to grow well, the business product is well known and is a leader in market share. It also has a very competitive ability and the management team is professional, famous, and talented.

They should also invest in large market cap stocks which is a business with gradual and continuous growth in business operation. They are resistant to a crisis because it is the market leader who has a competitive advantage. It is also a stock with strong fundamentals and is popular with institutional investors both at home and abroad. At the same time, the stock price is not very volatile, usually fluctuates according to the market or stock index. Therefore, it is a group of shares traded.

40%: invest in foreign equity funds. There are two types of mutual funds: Asset Management company (Asset Management Company), and self-fund management by directly invest in foreign stocks with the Asset Management Company to invest in equity funds managed by an overseas fund manager which includes both investing in a single stock fund (Feeder Fund) and using the money to buy a number of foreign equity funds (Fund of Funds).

15%: invest in growth stocks. It is a business that is growing continuously, with competitive potential. The cash flow remained sound, with high growth net profit.

2.Medium aggressive portfolio

Focus mainly on investing in stocks such as 40% investing in blue-chip stocks, large market cap stocks, 30% investing in foreign equity funds, 15% investing in growth stocks, 15% investing in mixed funds. (Funds that mix Investing in stocks and debt or invest in other forms of instruments together with the investment ratio depending on the investment policy of that fund)

3.Low aggressive portfolios

Invest in a mix of stocks and bonds, for example, 30% invest in blue-chip stocks, large market cap stocks, 30% invested in fixed-income funds, 25% foreign equity funds, 15% invested stock growth.

4.Medium passive portfolio

Focus on asset allocation, safety investment, such as 55% in fixed income mutual funds, 25% in blue-chip stocks, large market cap stocks, 15% investment funds, foreign stocks, 5% investment stocks growth

5.High level of a passive investment portfolio

Allocate maximum security investment assets such as 60% in fixed-income funds, 20% in money market funds, 15% in blue-chip stocks. Large market cap stocks, 5% investment funds, foreign stocks.

“Saving money early makes you get rich early” is a high probability financial commentary. If the money is invested to suit his own investment style, especially start investment at a young age, there will be more advantages. The money divided to invest will not be a large sum but the more you invest continuously and the discipline you have will make the power of compound interest rates. In the end, the result is getting rapidly your financial freedom.