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Powerful Proof Anyone Can Invest for an Early Retirement - December 19, 2019

Zacks Equity Research

Building sufficient financial resources to retire early may sound like a dream, but making that dream come true is not as hard as it may sound. The main thing is simply to save more money each month. No big deal, right? Well ...

Usually, advisors advise 15% to 20% of total income saved every month as an objective - yet in the event that you want to retire earlier, you likely need to tighten that number up to 40% or half of your pay. Not a discipline easily practiced when you review or consider that a substantial segment of your paycheck goes to basic, non- negotiable lifestyle needs. But if you are willing to make some serious lifestyle adjustments and trade-offs, it's achievable.

A generally new development called Financial Independence, Retire Early (FIRE) has been created around this "sacrifice and over-save now to retire early" idea. FIRE supporters create exacting savings plans (up to 75% of income) and make related compromises like living in small homes, walking to work every day, prohibitive weight control plans, etc. This way might be unreasonably prohibitive for many, yet the mentality offers a few takeaways that may merit consideration.

First, stick with the fundamentals of long-term growth investing: Choose a diversified portfolio of stocks with exposure to different styles, sizes, sectors, and regions.

To accelerate the retirement investment cycle, you can construct a portfolio designed with more risk - and the potential for higher returns - but it should still be appropriately diversified to protect against larger than average market drawdowns that can be difficult to recover from and ruin any chance to accomplish your early retirement goal. There are numerous ways to diversify a portfolio, and how you do so should depend on your age, your risk tolerance, your growth and income needs, and your long-term goals.

Once you have accelerated your savings and put an ongoing plan in place, invest your savings into your portfolio as soon as possible. Don't try to time the market. Leave your portfolio alone, and let the compounding nature of the markets do its magic to help grow your retirement nest egg exponentially over time.

You may want to look at growth stocks with attributes acceptable for retirement investing like low beta, strong earnings estimates, positive sales growth, and expected future growth.

Zacks offers investors useful rankings for lower risk growth stocks for retirement portfolios. The following are a few selections that merit a closer look: Gaming and Leisure Properties (GLPI), Horizon Bancorp (HBNC) and Independent Bank (IBCP). Earnings and revenue has seen growth of at least 5% or higher over the last five years, with a beta of 1 or lower.

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Independent Bank Corporation (IBCP) : Free Stock Analysis Report
 
Horizon Bancorp (IN) (HBNC) : Free Stock Analysis Report
 
Gaming and Leisure Properties, Inc. (GLPI) : Free Stock Analysis Report
 
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