Retirement investing can look daunting when you read too much and listen to CNBC too often.
No matter what trouble we all have in life, it’s because we went ahead with action and no plan. Of the 50% of marriages that end in divorce, how many participants had a checklist, went out with at least 10 people, compared and contrasted the strengths and weaknesses of potential partners and had a definite plan on how to select a spouse? No one! Retirement investing is no different. Expect a 50% chance of success (or worse) if you have no plan. Here’s how to construct a simple retirement investing plan.
1. How much do you feel comfortable with in stocks? The more stock (or stock funds) you own, the better for the long haul (please look up the Trinity Study). But if the gyrations in the stock market make you crazy, what is the maximum amount that you can have in stocks and sleep well? Let’s say it’s 30%. Each year you will look over your entire portfolio and re-balance (if your stocks went up to 35% of your portfolio, you will sell some to proceed with 30% into the following year). I would highly recommend the Dow Dividend Strategy for a suitable retirement investing stock selection plan. It’s a low volatility option to participate in global business growth. These stocks also pay handsome dividends, which when reinvested, really give stocks their best showing.
2. The amount you spend in a year will go into a money market account. Let’s say that’s 5% of what you have.
2. The remainder goes into fixed income selections, that’s 65% of the portfolio. Those fixed income selections could be any type of bond, preferred stock, note secured by real estate, or fixed annuity. Please do NOT invest in bond mutual funds and I will explain in a future post why they are a retirement investing sucker deal. All fixed income investments that you select must have a maturity date and that will be explained in a future post.
Your target interest return needs to be reasonable given current interest rates and your comfort level with different retirement income options. For example, one of my investments is a note on a home with a 15% loan to value (the person who lives in the house put 85% down upon purchase). I get 9% interest on my loan. If the owner defaults, I get the property but I am okay with that, in fact, I would be delighted. So your comfort comes from asking “what’s the worst case with that investment and the probability of the worst case.” If you feel comfortable with both metrics, then the investment sounds suitable. Even in this low interest environment, a retiree should comfortably be able to construct an income portfolio yielding 6% or more.
Note that the above is a simple retirement investing plan. It won’t fit everybody and that’s why these things get complex. The moment one starts adding constraints and details of their personal situation, the plan gets more complex to fit the retirement investing circumstances. But at least this is a framework that gets you thinking about writing down and planning retirement.
Great post about retirement investing. Very sound strategy and something easily customizable dependent on the amount of risk you’re willing to take.
One thing I would be interested in hearing about in a future post: Acquiring notes on homes. The investment you discuss in the post above sounds like an amazing deal. A 9% return and if they default you get the house!? All for only 15% of the initial value. I’d definitely be curious as to the rarity of that kind of investment and how you happened upon it.
this is an amazing post about retirement investing, this type ofblogs are very helpful for retirement planning and investing.
Can you please tell me retirement planning in a more descriptive way.
Thanks
well as you see retirement investing is reallly advisable!
Retirement investing may be planned by following some good stock expert advice by professional analysts
I prefer to make my retirement investing in Internet Business. Since it can be long term success. I learn a lot about this kind of retirement investing from Timothy Ferrish the author of 4 hour work week, you can read it if you interested to enjoy more time with your family while cash still running to your bank account.
Rian – Thinning Hair Women
I’m only 20 years old, but it’s never to early to start thinking about retirement ;). Great list, I’ve got a good direction for how I can go about planning my retirement now.
With Interest Rates as low as they are people better plan to use more Annuities and growth type investments. Boom Boom Bernanke isn’t raising rates anytime soon.
Solano Hair Dryer
Great tips on a simple retirement plan. All the more reason why people should really prepare early. Just like James said, it’s never too early to start thinking about retirement.
How can a person who does not work believe that they are entitled to money?
You nor most other Americans do not “deserve” anything. Many of you do not even do a hard day’s work. Most of you never break a sweat. Most of you drive to work and sit in air conditioned buildings with indoor plumbing and fast food in vending machines.
Do you realize that many people around the world work in the grueling sun doing farm work or in a hot factory with toxic fumes floating around? How can you call working at Starbucks or Walmart hard work? How can you call sitting in front of a computer screen clicking a mouse or loafing around answering a telephone hard work? How can you call making a paycheck on a regular basis and having health insurance, life insurance, and retirement savings “slavery”?
Do you realize that most people do not make enough to eat on a daily basis? Do you know that most people on Earth do not have access to any medicine or clean water or indoor plumbing or electricity? Do you understand that many people never make it to “retirement age” because they die from diseases that Americans stopped dying from a hundred years ago?
Thanks for the insightful blog-post. Yes, certainly people doesn’t think about Retirement Investments in their young age and then suffer in the last. Planning is the key of happiness and we should definitely think in this direction.
Great “Useful” tips for the investing savvy people out there!
“Note that the above is a simple retirement investing plan.” And that is what people should use the info from your article for, a PLAN to start thinking about planning for there future investing the smart way!
AWESOME!
Thank you for the great post on retirement plan.well as you see retirement investing is reallly advisable.
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Nancy
Thank you for the great post on retirement plan.well as you see retirement investing is reallly advisable.useful tips..
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Nancy
Thanks for wonderful tips. Surely investment in stock also works well. It will increase depends on the market trends. Thanks for sharing about “Retirement Investing”.
its very good post for future planning, ya i agree we must save something and plan something for our retirement time.
Even though I’m not that old, it was interesting to read about Retirement investing.
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You’re an expert in this area!