The Managing Director and Chief Executive Officer, Sigma Pensions, Mr. Dave Uduanu, has urged youths to plan towards saving for their retirement early in a bid to achieving financial independence.
He said this while speaking to youths at a master class session powered by Sigma Pensions at the Junior achievers Conference in Lagos.
Uduanu also urged the participants to be disciplined in spending starting before they become working adults an also lectured extensively on the importance of starting to save towards retirement.
He said: “By starting pension saving immediately you start working, you are on your way to financial Independence. You can start early, how much you save depends on you. The trick is that, from studies, if you save 20 to 30 per cent of your income since the day you start working, you are on your way to financial independence.”
Furthermore, he added that as they become salary earners they should work towards increasing their savings percentage.
He said: “Now as your income increases, the rate of increase in consumption should be lower than the rate of increase in income meaning that, your savings rate should go up. So if your income is increasing by 50 percent a year, but your consumption is increasing by only seven percent a year, it means that your savings rate must go up.”
“If you start pension savings at age 25, and by the time you are 60 years, depending on the quality of your savings, and when you leave it in an account that compounds at 15 percent a year, buy the time you are 60, it is going to worth a lot bu the trick is you need to start early.
“The other trick is, when the money is being invested, don’t touch it. Another distinction you need to make is that there is a difference between savings and investment. And there is a difference between investment and business, or ventures.”
People often mix it up. People often think that their business is their retirement savings; it is not. Your retirement savings account is that pot of money that you don’t touch till you retire.
“It has to be a conscious effort to be discipline to it till retirement. That pot of money should be kept intact, and you shouldn’t touch it.
“The reason why investment is important is because of compound interest. A lot of people go and keep their money in the bank, and they are paying you three percent. You are losing money every day. You should put it in an investment account, while you are getting more than three percent.
“So if you are getting more than 10 percent in that account, you are on your way to financial Independence.”