Sunday, March 06, 2005
7 Ways to Retire
Don't get ripped off
First off, don't get ripped off. Don't fall for get-rich-quick schemes, whether they be selling real estate with no money down, placing mysterious ads on the Internet that guarantee you thousands in sales, or acting on hot tips from a broker who cold-calls you. There's no better wisdom than this: If it sounds too good to be true, it probably is.
Don't turn down free money
If your employer offers you matching funds in your 401(k) and you don't take advantage of it, you are throwing money away. If you are eligible for an IRA and don't contribute as much as you can every year, you are stealing from your own future and tossing extra money to Uncle Sam by passing up tax breaks.
Don't fear stocks
It's a fact: Inflation will erode your long-term savings if you leave it in low-interest-paying bonds or money market funds. You want to retire before you're 90, don't you? Stocks are still the best-performing investment vehicle for the long haul.
Take advantage of volatility
The best way to take advantage of the volatility of the stock market -- yes, take advantage of it -- is to dollar-cost average into your 401(k), IRA, or other investment accounts every month. That way you'll buy fewer shares of stock when prices are wildly high and more when stocks are at better prices.
Take the easy route to investing success
Nobody says investing in the stock market has to be rocket science. You can beat 75% of the mutual funds out there just by putting your money in a total market index fund. If you want to pick your own stocks, the Fool can help. But if you just want to put it on automatic pilot, you could do far worse than choosing an index fund.
Don't chase hot stocks
We've all been there. We bought Yahoo! (Nasdaq: YHOO) at $130 a share. Or Cisco (Nasdaq: CSCO) at $80. Or maybe we're even taking a flyer on Google (Nasdaq: GOOG) at $150 a share or Taser (Nasdaq: TASR) at $50. There's nothing wrong with taking some risk -- with money you can afford to lose. Which means you should have a healthy chunk in an index fund, or the kind of stocks you can find in Motley Fool Income Investor or Inside Value before you explore Rule Breaker territory.
Let other people do the hard work
OK, here's where I show my true colors. As I'm sure you've gathered by now, I'm a lazy investor. And while there are definitely some things you can easily do to give yourself the best chance for a great retirement (see steps 1-6), planning for retirement is not easy. It's filled with pitfalls and choices. And I hate pitfalls and choices.
If you're like me, you want to get the best information and advice available to make sure you not only stay on track with your investments but also successfully navigate the intricacies of asset allocation, insurance, long-term care, taxes, and Social Security while ensuring you do the things that are important to you -- such as waterskiing and doting on your grandchildren.
Whether you're 30 years from retirement or living in retirement right now, you need somebody in your corner helping you keep your dreams on track. That may be a good financial planner, if you can find one. Or that may be a Fool like Robert Brokamp, whose newsletter advisory service promises to help you Rule Your Retirement through thick and thin.
First off, don't get ripped off. Don't fall for get-rich-quick schemes, whether they be selling real estate with no money down, placing mysterious ads on the Internet that guarantee you thousands in sales, or acting on hot tips from a broker who cold-calls you. There's no better wisdom than this: If it sounds too good to be true, it probably is.
Don't turn down free money
If your employer offers you matching funds in your 401(k) and you don't take advantage of it, you are throwing money away. If you are eligible for an IRA and don't contribute as much as you can every year, you are stealing from your own future and tossing extra money to Uncle Sam by passing up tax breaks.
Don't fear stocks
It's a fact: Inflation will erode your long-term savings if you leave it in low-interest-paying bonds or money market funds. You want to retire before you're 90, don't you? Stocks are still the best-performing investment vehicle for the long haul.
Take advantage of volatility
The best way to take advantage of the volatility of the stock market -- yes, take advantage of it -- is to dollar-cost average into your 401(k), IRA, or other investment accounts every month. That way you'll buy fewer shares of stock when prices are wildly high and more when stocks are at better prices.
Take the easy route to investing success
Nobody says investing in the stock market has to be rocket science. You can beat 75% of the mutual funds out there just by putting your money in a total market index fund. If you want to pick your own stocks, the Fool can help. But if you just want to put it on automatic pilot, you could do far worse than choosing an index fund.
Don't chase hot stocks
We've all been there. We bought Yahoo! (Nasdaq: YHOO) at $130 a share. Or Cisco (Nasdaq: CSCO) at $80. Or maybe we're even taking a flyer on Google (Nasdaq: GOOG) at $150 a share or Taser (Nasdaq: TASR) at $50. There's nothing wrong with taking some risk -- with money you can afford to lose. Which means you should have a healthy chunk in an index fund, or the kind of stocks you can find in Motley Fool Income Investor or Inside Value before you explore Rule Breaker territory.
Let other people do the hard work
OK, here's where I show my true colors. As I'm sure you've gathered by now, I'm a lazy investor. And while there are definitely some things you can easily do to give yourself the best chance for a great retirement (see steps 1-6), planning for retirement is not easy. It's filled with pitfalls and choices. And I hate pitfalls and choices.
If you're like me, you want to get the best information and advice available to make sure you not only stay on track with your investments but also successfully navigate the intricacies of asset allocation, insurance, long-term care, taxes, and Social Security while ensuring you do the things that are important to you -- such as waterskiing and doting on your grandchildren.
Whether you're 30 years from retirement or living in retirement right now, you need somebody in your corner helping you keep your dreams on track. That may be a good financial planner, if you can find one. Or that may be a Fool like Robert Brokamp, whose newsletter advisory service promises to help you Rule Your Retirement through thick and thin.
# posted by Logan Ramasamy @ 12:09 PM 
