Overview: The fastest way to retire sooner rather than later is to increase your savings rate. A solid goal is to live on half your income. If you aren’t there yet, use this spreadsheet to see where you are and where you might be able to improve your numbers. Set a savings goal and move toward it every year.
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Overview: The best way to attain good returns is to buy low and sell high. One can accomplish this with a buy and hold strategy. Expect volatility, major ups and downs, and large market corrections. Expecting large drops helps curb the natural impulse to sell at the wrong time. Buy and hold does as well. Stay the course and play the long game.
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Overview: Determine your asset allocation: your stock to bond ratio. Stocks carry more risk but also more reward. Once you’ve decided on an allocation, stick with it. Don’t plan on changing your allocation but once a decade or so. Keep your allocation consistent across your entire portfolio. A simple spreadsheet or a free service like Personal Capital can easily show you where to add or remove funds to keep your allocation within the target upon which you’ve decided.
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Overview: Passive index funds are great. They are diversified, low cost, tax efficient, easy to buy and sell, and can be liquidated quickly. They are great for beginners. They are also great for sophisticated investors who think index funds are beneath them!
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Overview: Steer clear of fancy, complicated, or risky investment options. Be happy with market returns with low investment fees. Investing shouldn’t be exciting, it should be boring. Plain old index funds fit the bill.
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Overview: There are lots of fantastic options for investing for retirement. Always start with tax deferred options like a 401(k) or IRA. Max out those accounts before looking at more creative options like a taxable brokerage account. Pay off high interest consumer debt like credit cards with 20% interest. Doing so is an immediate 20% return on investment. Finally, don’t overlook the value of a Roth IRA or even an HSA.
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Overview: Investing for retirement is very important, but for many people, it’s out of sight and out of mind. Investing isn’t as hard as the finance industry has made it sound. If you do it right. Write down your goals so you have a plan. Get your finances in order so as to make investing a key component of your budget. Finally, do what so few bring themselves to do: start.
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