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People are working longer, baby boomers are delaying retirement and many have come to accept that there are fates worse than working in your golden years.
Many people would like to be so lucky. The longer you work, the fewer years you’ll have to support yourself with retirement income, and the larger your social security checks are likely to be once you finally do call it quits.
Then again, there is the lure of retiring early, especially if you can do so from a financially secure vantage point.
Can you invest your way to an early retirement? The answer, if you are both smart and lucky, is, perhaps.
Here’s the key: While it’s essential to invest wisely to prepare for an early retirement, the investments go beyond financial investments.
Here’s a list of the investments you should be focusing on in your 20s and 30s if you aim to retire in your 40s or 50s.
- Invest in high-growth stocks and mutual funds. While this is not the only key to early retirement success, it is an important one. A diversified portfolio of high-yield stocks and mutual funds – including dividend stocks that you can reinvest – will offer some of the best odds of growing your money. The trick is to invest early enough so that the gains add up over time.
- Invest in your career. Perhaps the most counterintuitive advice for those focused on early retirement, investing in your career is actually one of the best things you can do to lead a rich and fulfilling life in retirement. Achieving high earnings in your earlier career years will not only leave more for you to save and invest, but it will position you to bring in a larger Social Security check when you’re eligible. Most people who are able to retire early do so after a successful career. So seek out something that offers significant financial rewards and keep your nose to the grindstone. Your career might not exactly be a sprint, but it will likely proceed at a somewhat faster pace than a marathon.
- Invest in your home. While it’s possible to debate the merits of renting versus buying at various times in your life, if you’re focused on an early retirement you should also be focusing on keeping your housing costs low. In many places in the country, buying a reasonably comfortable yet modest home at an early age can be a good strategy. You’ll at least lock in your housing costs and may be able to pay off your mortgage in full before retirement.
- Invest in your health. The fact is, whether we plan to work until we’re 90, or retire at 40, we all ought to invest in our health. While health outcomes are not always in our control, adhering to preventative measures will tip the odds in your favor. This not only increases the odds that your years spent in retirement will be enjoyable, but it can also help lower your health care costs – a leading expense in our later years.
- Invest in your education. For starters, your financial education. One of the realities of early retirement is that you’ll spend less time working for money and more time managing your money. To successfully manage a diversified portfolio you’ll need to understand different asset classes, from small caps to international stocks, and keep abreast of shifting trends. Retire from work if you can, but commit to a lifelong education.
- Invest in a rich future (in the broadest sense of the word). This means your family, your friends, your hobbies … keep sight of all of these while you are working long hours and managing your portfolio. Retiring early is an ambitious goal. But don’t let the end goal blind you to the process. Picture the life you hope to lead and remember it will take more than just money to sustain it and enjoy it.
Dividends for Every Month of the Year
If you’re looking for just one dividend stock to round out your income stream, consider a little-known company that pays out dividends 12 months of the year.
Click here to see the full details of this company in my Dividend Calendar…