By: Chris Rowe — May 2, 2019
Are you on pace to a million dollar retirement?
If you answered no, then you’re not alone.
Saving for retirement always tops the list of goals investors have.
Today we're going to look at how you can not only "jump start" your savings goal (and any other financial goal)...
... but "turbo charge" it as well.
We'll begin our discussion with a very sobering statistic...
According to a recent survey by Time magazine, one in three Americans has $0 saved for retirement. Even more startling, 23% have less than $10,000 saved.
That means that 56% of all Americans have less than $10,000 saved for retirement and that’s a statistic that’s downright scary.
What’s even more troubling is the fact that 42% of Millennials have not begun saving for retirement either.
And considering the fact that 26 year olds make up the greatest proportion (4.1 million workers) of the working age population in the United States, I’m afraid this generation is well on the way to making the same mistakes that many of their parents and grandparents made.
But here’s some good news.
With a little discipline, following a simple plan and taking this one extra step that I’m going to share can lead you on a path to a million dollar retirement.
And get this…
The extra step I’m about to reveal is so powerful, that it can get you to your retirement goals seven years faster.
Now think about that for a moment…
How would you feel having an extra seven years to do anything you want like traveling the world... buying a vacation home... or simply enjoying a lifestyle of less worry and more leisure?
If that sounds great, then you can get started right now to secure that million dollar retirement by following these three easy steps.
Now before I get into the three steps, you might be saying to yourself, "This is going to take a CEO sized salary or an enormous amount of risk." Nothing could be further from the truth. Even if you make a little less than $60,000 per year, it’s enough to build a million dollar retirement.
And the three step process I’m about to reveal can get you there seven years faster than normal -- even if you never receive another raise in your lifetime. (Which we hope is not the case.)
The hardest part of all is simply resolving to take that first step. So, ready?
STEP 1: Commit to Saving a Small Portion of Your Income.
Setting up a simple plan to save a modest portion of your income is the first step to becoming a millionaire. Sounds like an easy step, right? Yet so many Americans fail to take it.
One of the secrets to building wealth is discipline. And by taking this first step, you not only create the real, monetary foundation for growing a viable nest egg, you also begin training yourself in the lost art of discipline.
Refer back to our modest $60,000 per year example. If you can set aside $5,500, or roughly 9% of your annual gross income towards retirement, you’ve taken the first step. That amounts to $458 per month. Not peanuts, to be sure. But also not some extravagant amount either.
An easy way to accomplish this particular goal is by setting up an auto draft payment that will withdraw the funds from a checking account to your investment account. By setting up the auto draft, it helps you stay the course on achieving your millionaire retirement goal.
Think of it as "discipline on autopilot."
STEP 2: Set Up a Tax-Advantaged Individual Retirement Account (IRA).
If you haven’t opened up an IRA, do it today. It’s free, it’s easy, and buying and selling securities with one has never been cheaper. Most transactions cost less than a cup of coffee at your favorite cafe. And in some cases, commissions are even waived.
An IRA is a great investment vehicle for building wealth because not only are the capital gains tax deferred, but the annual contributions are tax deductible. In other words, Uncle Sam will help you become a millionaire while also reducing your income tax bill. Currently, the annual contribution limit in an IRA is $5,500 per year ($6,500 if aged 50 or older), so you're right at the limit.
Contributions can be made as a lump sum or at periodic intervals (such as the monthly auto draft option we mentioned earlier). The periodic contribution is a good way to smooth out volatility as prices oscillate throughout the calendar year. In other words, you’ll be dollar cost averaging with the principle contributions which should make decisions simpler.
If you’ve already taken the first two steps, congratulations! You’re well on your way to a million-dollar retirement.
That's because if you stick to this simple, disciplined plan -- investing $5,500 per year -- for 30 years, your $165,000 principle investment could turn into $1,036,000.
Think about that. You create a "set it and forget it" plan that shunts a mere $485 into you account. You "forget it" for 30 years...
And when you look up at the end of the game the scoreboard reads "$1,036,000."
This miracle is made possible by the power of the financial world's ultimate "virtuous circle." I'm talking about compounding. Compounding is simply reinvesting your returns in order to generate additional, greater returns which are then re-re-invested to blossom even further, world without end. (Or until you begin to live comfortably on the proceeds.)
And just to be clear, we're not indulging in a game of make believe here. Our example of turning $165,000 into more than $1 million is validated by the historical annual return (9.5%) that the U.S. stock market benchmark has generated since 1927.
In other words, in the long run, investors can expect a 9.5% annualized return by simply buying and holding securities that track the performance of the broad stock market! That's amazing. And the best is yet to come.
What if I told you that there's a way to triple your 30-year performance by turning that same $165,000 principle investment into $3 million during the same period? Or if time is of the essence, by meeting your million-dollar retirement goal seven years earlier.
In other words, instead of 30 years, it’s possible to retire with a million dollar nest egg in 23 years -- all without taking any additional risk.
If you like the sound of that, then you’ll want to pay close attention to our third and final step; it’s a crucial step, because it is the secret sauce to growing wealth at a faster pace.
It also happens to be the cornerstone of the True Market Insider investing approach.
Step 3: Embrace Relative Strength Investing.
Relative Strength measures the performance of one security in comparison to another. The analysis can also be expanded to a grouping of securities such as sectors and asset classes.
At True Market Insider, we use the Relative Strength methodology in order to identify which parts of the overall market are the strongest and which ones are the weakest.
As you've heard us say before, by avoiding parts of the market that are underperforming and focusing on parts that are outperforming, you’ll increase your odds of generating higher returns. This in turn increases the rate of any compounding.
At True Market Insider, we break the overall stock market into 41 narrow sectors (and five International groups) in order to identify which parts of the market are outperforming and which ones are underperforming.
Now that you're a True Market Insider reader, you’ve begun the journey to uncovering the “true market” and taken a step closer to your financial freedom.
See you soon!