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Powerful Proof Anyone Can Invest for an Early Retirement - July 27, 2020

By Zacks Investment ResearchStock MarketsJul 26, 2020 09:37PM ET
www.investing.com/analysis/powerful-proof-anyone-can-invest-for-an-early-retirement--july-27-2020-200532030
Powerful Proof Anyone Can Invest for an Early Retirement - July 27, 2020
By Zacks Investment Research   |  Jul 26, 2020 09:37PM ET
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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...

The typical rule of thumb given by financial planners is to have a goal of saving up to 20% of total earnings. But if you want to retire when you're younger, that percentage will probably need to be more like 40% to 50% of your income. Of course, that's not so simple since a big part of your paycheck goes to day-to-day, necessary expenses. So if you want to save that much, you need to make some serious lifestyle adjustments. It requires making changes, but it's doable.

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 speed up the retirement investment cycle, you can build a portfolio structured with more risk - and the potential for higher returns. It should in any case be adequately diversified to safeguard against sharper than normal market downturns that can be hard to recuperate from and that can ruin any opportunity to achieve your early retirement goal. There are various strategies to diversify a portfolio, and how you do so should be guided by your age, your risk appetite, your growth and income needs, and your long-term objectives.

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.

Astute investors pick retirement growth stocks with 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: OceanFirst Financial (OCFC), Virtu Financial (NASDAQ:VIRT) and Waterstone Financial (NASDAQ:WSBF). 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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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

Waterstone Financial, Inc. (WSBF): Free Stock Analysis Report

Virtu Financial, Inc. (VIRT): Free Stock Analysis Report

OceanFirst Financial Corp. (OCFC): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research
Powerful Proof Anyone Can Invest for an Early Retirement - July 27, 2020
 

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Powerful Proof Anyone Can Invest for an Early Retirement - July 27, 2020

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