U.S. markets closed
  • S&P Futures

    3,831.00
    +3.00 (+0.08%)
     
  • Dow Futures

    31,368.00
    -3.00 (-0.01%)
     
  • Nasdaq Futures

    12,806.00
    -25.75 (-0.20%)
     
  • Russell 2000 Futures

    2,187.10
    -12.90 (-0.59%)
     
  • Crude Oil

    63.18
    -0.35 (-0.55%)
     
  • Gold

    1,771.00
    -4.40 (-0.25%)
     
  • Silver

    27.44
    -0.24 (-0.87%)
     
  • EUR/USD

    1.2160
    -0.0027 (-0.22%)
     
  • 10-Yr Bond

    1.5180
    +0.1290 (+9.29%)
     
  • Vix

    28.89
    +7.55 (+35.38%)
     
  • GBP/USD

    1.3976
    -0.0036 (-0.26%)
     
  • USD/JPY

    106.0580
    -0.1720 (-0.16%)
     
  • BTC-USD

    47,603.19
    -2,998.62 (-5.93%)
     
  • CMC Crypto 200

    949.96
    -44.71 (-4.49%)
     
  • FTSE 100

    6,651.96
    -7.01 (-0.11%)
     
  • Nikkei 225

    29,397.86
    -770.41 (-2.55%)
     

Want To Retire Early? Learn the Intelligent Investing Secret - January 31, 2020

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·3 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

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 ...

Typically, advisors peg 15% to 20% of total income saved each month as a goal - but if you want to retire earlier, you probably have to ratchet that number up to 40% or 50% of your income. Not a feat easily accomplished when you review your take into account that a good portion of your paycheck goes to essential, non-negotiable lifestyle items. However, if you are willing to make some serious lifestyle changes and sacrifices, it's possible.

A relatively new movement called Financial Independence, Retire Early (FIRE) has been developed around this "sacrifice and over-save now to retire early" concept. FIRE followers develop strict savings programs (up to 75% of income) and make associated sacrifices like living in small apartments, walking to work every day, restrictive diets, and so on. This path may be too restrictive for many, but the mindset offers some takeaways that might be worth considering.

To start, stick with the essentials of long-term growth investing: Build a diversified portfolio of stocks with exposure to various 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.

The Zacks Rank routinely recognizes lower risk growth retirement portfolio picks, and here are a few that may be worth considering: CyrusOne (CONE), Lockheed Martin (LMT) and Merck (MRK). These growth stocks have strong Zacks Ranks and a beta of 1 or lower, with earnings and sales growth of at least 5% over the past 5 years.

Do You Know the Top 9 Retirement Investing Mistakes?

Whether you're planning to retire early or not, don't let investing mistakes derail your plans.

If you have $500,000 or more to invest and want to learn more, click the link to download our free report, 9 Retirement Mistakes that will Ruin Your Retirement.


This report will help you steer clear of the most common mistakes, like trying to time the market, lack of diversification in your portfolio, and many more. Get Your FREE Guide Now
 
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
CyrusOne Inc (CONE) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.