What is the best way to save up for retirement?
The best strategy is probably to employ a combination of strategies. Be cautious of financial advisers or sales people trying to offer a one size fits all product. Before even going into product mixes though you need to consider the enemies of retirement wealth:
- Taxes: Do you think they'll be higher or lower in the future?
- Inflation: Do you think "stuff" will be more expensive when you retire?
- Market Crashes: Can you handle seeing your retirement drop 30% - 45%?
- Income: How much annual income do you need to live on (and for how long?) so you don't end up at Wal-Mart as a greeter?
Hope this helps!
Mark | 08.14.15 @ 17:46
Mark brings up a great point, there is no one size fits all. We get requests from folks every day about this. We have found that by asking questions specific to your needs and listening to the answers helps is identifying what is really behind some of these products. Never stop asking questions until you are satisfied with the answers. This is your hard earned $$. So, these $$ need to work just as hard for you as you have for them.
Here are some thoughts from my friend Charlie Munger:
Charlies Munger's 10 Rules For Successful Investing:
1). Live Below Your Means - Munger notes that its very important to spend less than your income, especially when you are starting your career. Invest the excess funds wisely. Munger said that the hard thing to do is to accumulate your first $100,000 and the first million is the next big hurdle.
2). Understand Your Risk Tolerance - Every Investor needs to know the level of risk that they can take. Losses are ineviable and investors must follow an investment strategy that fits their risk tolerance.
3). Research Opportunities - Investors must be able to process the vast amount of information and learn how to evaluate the risk and rewards of potential investments.
4). Invest For The Long-Term - Volatility has never been a big concern to Munger, instead it should be welcome by long-term investors, since it creates the opportunity to increase your investments at lower prices in the short-term. Invest for the long-term and compounding will do the rest.
5). Funds Are No Substitute - Investors are oversold on the benefits they receive from money managers. Total return from Wall Street money managers are eaten up by transaction costs, taxes, and fees.
6). Patience, Coupled With Decisive Action - Excellent investment opportunities are few and far in between. Investors must continually search and evaluate investment opportunities. You have patience when looking for investment opportunities since you will reject 99 out of 100 opportunities that cross your desk. When a great opportunity crosses your desk, act decisively, and don't waste time overthinking it.
7). Tax Planning - Taxes and tax planning play a major role in wealth accumulation.
8). Love The Process - You must love the evaluation and investment process since it requires a lot of work.
9). Pay A Reasonable Price - While value is important, investors should buy good businesses that are in sectors that exhibits favorable economic conditions. Good businesses will grow in value over time.
10). Choose Good Partners - Every investor relies on advice from others when making investment decisions whether they are investment advisors, brokers, newsletters, friends, or business partners.
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| 04.17.16 @ 16:15