Retirement savings vs building lucrative assets
"Well... (in the US, at least) ""making investments and building assets"" is how you save for retirement.  The investments just happen to be in the stock market, and the federal legislature has directed the US version of  Inland Revenue Services to give special tax breaks to investments which are not withdrawn until age 59 1/2. I don't know if there are such tax breaks in Pakistan, or what the stock market is like there, so I'm presuming that by saying, ""building lucrative assets"", your father is referring to buying real estate and/or becoming a trader. Anyway, it's a good thing that you are looking so far ahead in life instead of only thinking of fast cars and pretty girls." Fahad, in finance we make a distinction between investments that tend to grow in value and assets that hold value.  Investments that grow in value are generally related to investing in well-thought out businesses.  Investments can be done in retirement accounts through stocks and bonds but also owning part of a business directly.  Good investments make more and more money off the money you put in. Common examples of assets include gold and other non-productive property like real-estate you don't rent or cars.  You can even have some assets in your retirement account as many would argue government bonds behave like assets.  All of these things tend to (more or less) go up in value as the cost of everything goes up in value, but don't tend to make you any excess money in the long run. There is certainly a place for both investments and assets.  Especially as a young person it is good to lean toward investments as you likely have a lot of time for the money to grow as you get older.  As RonJohn suggests, in the United States this is fairly easy as retirement accounts are common there is a long history of stable financial law even in crises.  Pakistan's institutions are fairly stable and improving but still assets and investments of all types can be riskier. So, I recommend taking your father's advice... partially. Having some assets are good in riskier situations, but good investments are generally the way to grow comfortably wealthy.  A good mix of the two is the way to grow wealthy slowly while protecting yourself from risk.  You, your father and your neighbors know you local situation better than I, who has only visited a number of Pakistan's neighboring countries, so I can't really give more detailed advice but hopefully this gets you started.
"The standard interpretation of ""can I afford to retire"" is ""can I live on just the income from my savings, never touching the principal."" To estimate that, you need to make reasonable guesses about the return you expect, the rate of inflation, your real costs -- remember to allow for medical emergencies, major house repairs, and the like when determining you average needs, not to mention taxes if this isn't all tax-sheltered! -- and then build in a safety factor. You said liquid assets, and that's correct; you don't want to be forced into a reverse mortgage by anything short of a disaster. An old rule of thumb was that -- properly invested -- you could expect about 4% real return after subtracting inflation. That may or may not still be correct, but it makes an easy starting point. If we take your number of $50k/year (today's dollars) and assume you've included all the tax and contingency amounts, that means your nest egg needs to be 50k/.04, or $1,250,000. (I'm figuring I need at least $1.8M liquid assets to retire.) The $1.5M you gave would, under this set of assumptions, allow drawing up to $60k/year, which gives you some hope that your holdings would mot just maintain themselves but grow, giving you additional buffer against emergencies later. Having said that: some folks have suggested that, given what the market is currently doing, it might be wiser to assume smaller average returns. Or you may make different assumptions about inflation, or want a larger emergency buffer. That's all judgement calls, based on your best guesses about the economy in general and your investments in particular.  A good financial advisor (not a broker) will have access to better tools for exploring this, using techniques like monte-carlo simulation to try to estimate both best and worst cases, and can thus give you a somewhat more reliable answer than this rule-of-thumb approach. But that's still probabilities, not promises. Another way to test it: Find out how much an insurance company would want as the price of an open-ended inflation-adjusted $50k-a-year annuity. Making these estimates is their business; if they can't make a good guess, nobody can. Admittedly they're also factoring the odds of your dying early into the mix, but on the other hand they're also planning on making a profit from the deal, so their number might be a reasonable one for ""self-insuring"" too. Or might not. Or you might decide that it's worth buying an annuity for part or all of this, paying them to absorb the risk. In the end, ""ya pays yer money and takes yer cherce.""" An accountant should be able to advise on the tax consequences of different classes of investments/assets/debts (e.g. RRSP, TFSA, mortgage). But I would not ask an accountant which specific securities to hold in these vehicles, or what asset allocation (in terms of geography, capitalization, or class (equity vs fixed income vs derivatives vs structured notes etc). An investment advisor would be better suited to matching your investments to your risk tolerance. I recommend saving for retirement first to leverage compound interest over a long time horizon. The historical real return on the stock market has been about 7%.  Assuming returns stay at 7% in the future (big assumption, but don't have any better numbers to go off of), then $8,000 saved today will be worth $119,795 in 40 years (1.07^40*8000).  Having a sizable retirement portfolio will give you peace of mind as you progress through life and make other expenditures. If you buy assets that pay you money and appreciate, you will be in a better financial position than if you buy assets that require significant cash outflows (i.e. property taxes, interest you pay to the bank, etc.) or assets that ultimately depreciate to zero (a car).  As a young person, you are well positioned to pay yourself (not the bank or the car dealership) and leverage compound interest over a long time horizon. There are two basic issues here.  First, there is the difference between accounting terms and their dictionary definitions.  Second, once you dig into it there are dichotomies similar to put vs call options, long sales vs short sales, bond yield vs interest rate.  (That is, while they are relatively simple ideas and opposite sides of the same coin, it will probably take some effort to get comfortable with them.) The salient points from the Wikipedia article on debits and credits: In double-entry bookkeeping debit is used for increases in asset and expense transactions and credit is used for increases in a liability, income (gain) or equity transaction. For bank transactions, money deposited in a checking account is treated as a credit transaction (increase) and money paid out is treated as a debit transaction, because checking account balances are bank liabilities. If cash is deposited, the cash becomes a bank asset and is treated as a debit transaction (increase) to a bank asset account. Thus a cash deposit becomes two equal increases: a debit to cash on hand and a credit to a customer's checking account. Your bank account is an asset to you, but a liability to your bank.  That makes for a third issue, namely perspective. I'm not a big fan of tax-advantaged retirement accounts. The rules on tax-advantages accounts can change at any time.  It's already painful to get money out before retirement (earnings or possibly contributions taxed as current income, plus 10% penalty).  The rules could get worse. There's also the assumption that your taxes will be lower when you retire.  I think this is a poor assumption. If you get free money from your employer for contribution to a 401(k), contribute up to what will get you all of the free money you can.  Otherwise, pay your taxes and keep control of your assets. So short answer: Keep as much as you can out of tax-advantaged accounts unless you're turning down free money to do so. You say A #1 priority, that implies multiple #1 priorities. Long term or medium term my goal is to pay off the mortgage. But short term paying off the mortgage isn't a concern. Some people are comfortable with a mortgage during retirement, others aren't. When I was younger the mortgage concern was not being overextended. I didn't want to be in a situation that dictated my financial decisions because I needed to make a big house payment. Being overextended is no longer a concern for me. Now I am looking in more detail about how my retirement will actually play out. How to handle my actual retirement income sources. For me, not having a mortgage simplifies my planning. "Keep in mind, there are too many variables to address in a single post. I could (and might) write a full book on the topic. One simple way to comprehend your perceived observation. In the 25% bracket, you have $1000 of income and two choices. Net out $750, and deposit to Roth, or deposit the full $1000 to the traditional IRA or 401(k). Sufficient time passes for the investment to grow 10 fold. For what it's worth, 8% at 30 years will do that.  The Roth is now worth $7500 tax free. The traditional 401(k) is worth $10000 but subject to tax. At 25%, we're at the same $7500.  For those looking to invest more than a gross $18,000, the Roth flavor is an effective $24,000, as post tax, this is $18,000. I wrote a bit more on this in the whimsically titled The Density of Your IRA. This is really a top 10%er issue, as it takes quite a bit of income for the $23,000 combined IRA and 401(k) limits to be a problem.  In my writing, the larger case to be made is for taking advantage of the tax rate difference between the time of deposit and withdrawal. A look at the 2016 tax rates is in order.  Let's stick with 25% while working. Now, at retirement, but before social security, as that's another story, the couple has $20,600 in standard deduction and exemption, and both the 10 and 15% brackets to enjoy.  Ignoring any other deductions, potential credits, etc, let's look at a gross $80,000 withdrawal.   The numbers happen to work out to an average 10%, with the couple being in a marginal 15% bracket. A full 25% or $20,000 tax would be the break-even to the ""same bracket in/out"" analysis, so this produces a $12,000 benefit.  This issue is often treated as if there were 2 points in time, the deposit, and the withdrawal. For most people, that may be the case. Keep in mind, current law allows a conversion to Roth any time in between. This gives an opportunity to make a deposit while in the 25% bracket, and convert in any year the marginal rate drops back to 15% for whatever reason.  Last - I can't ignore the Social Security problem. Simply put, when half of your Social Security benefits plus other income exceed $25,000 ($32,000 if married filing joint) your benefits start to become taxable, until 85% of your benefits are fully taxed. This issue is worthy of multiple posts by itself. It's not a deal killer, just another point to consider. A very high income earner might be beyond these levels already, in which case the point is moot. A low income earner, not impacted at all. It's those who are in the range to navigate this that would benefit to take advantage of the scenario I presented above and spend down pre-tax accounts, while planning to use the Roths when Social Security starts. This should make it clear - it's not all or none. Those retiring with $2M in 100% pretax, or $1.5M 100% in Roth have both missed the chance to have the optimal mix." You might be confusing two different things. An advantage of investing over a long term is the compounding of returns.  Those returns can be interest, dividends, or capital gains.  The mix between them depends on what you invest it and how you invest in it.  This advantage applies whether your investment is in a taxable brokerage account or in a tax-advantaged 401K or IRA.  So, start investing early so that you have longer for this compounding of returns to happen. The second thing is the tax deferral you get from 401(k) or IRAs.  If you invest in a ordinary taxable account, then you have to pay taxes on your interest and dividends for the year in which they occur.  You also have to pay taxes on any capital gains which you realize during the year.  These yearly tax payments are then money that you don't get the benefit of compounding on.  With 401(k) and IRAs, you don't have to pay taxes during these intermediate years.