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When we are in ourtwenties and stepping into our first jobs, we dream of a big house and foreign vacations, however, we hardlyponder upon the idea of retirement. The zeal to pursue and earn is so high that the idea of managing our finances often slips our minds. Fast forward to when we are40, going through a mid-life crisis and regretting not having to start saving early.

It is easier to save for retirement when you are younger and have lesser responsibilities. Just investing a little money atan early age can help you retire earlier than you expected. And who does not want an easy retirement?

Akhilesh Gupta, Chief Investment Officer, Aviva India has suggested ways to start sooner and retire better.

Steps to create a robust retirement plan in your 20s:

1. Financial Literacy To make meaningful investments,you should have enough knowledge about them. The first step to achieving this is to read and talk about money. For a step towards being financially literate for a better future, it is of utmost importance to start exploring and understanding the financial jargon and the procedures from an early age.

2. Budget and SaveTo understand the nature and pattern of thespending, you must track your expenses. This could be achieved throughbudgeting.Once you have budgeted, if you invest a portion of your pay regularly, you will know exactly how much money you have left for other expenses. This will help you in becoming financially disciplined.

3. Compound Your Money Once you have gained financial knowledge, you will realize the power of compounding. Compound interest is the interest on a balance that is reinvested, as a result, you earn more interest. It is the money-multiplier formula. If you start saving early, you give your money time to grow and compound. 

4. Invest in SIP and ULIPsFor the uninitiated, SIP is an investment mode through which you can invest in mutual funds monthly, quarterly, or semi-annual. On the other hand, ULIP (Unit Linked Insurance Plan) is an investment as well as an insurance plan where you investin stocks and bonds, and it generates returns closely linked to prevailing market conditions.One of the significant differences between the two is that ULIP offers life cover whereas SIP does not.

Thanks to the power of compounding, with investment instruments like SIP and ULIP, you can insure as well as generate additional income which will help you in creating a robust retirement plan in your 20s. But the first step is to understand the language of money and save it.

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