Retirement You know it's hard, not understanding how to do things. Many in America do not really understand or know who to plan to retire. The old myth is like, I go to work, they take money out of my check, after I do my time and work the number of years asked, I am guaranteed payments from my job until I die (penision) and I will get social security benefits. Well, part of this is true. However, what people often do not understand, is that, the amount of money they will be given may not be enough to survive. 
In giving you a personal example. I am a first generation Haitian American for my family. My mother and father when they first came here didn't work the best of jobs. My father finally landed a job working as a mechanic for New Jersit and remained there for close to 30 some odd years. Lucky for my father, his company was one that took care of their employees very well. They invested their monies, well, gave them good insurance plans, etc. However, of course it could always have been better. Because until this day (and my father retired almost two years ago) papers are still coming to the house that we don't even know what to do with. Now, when my mother retired, and she worked for Princeton University, we were in for a rude awaking. Princeton University unlike, New Jersey Transit, pretty much leaves for the employees to select how their monies should be invested. Which is a good thing, for those who understand what's going on, but is a bad thing for those who, aren't as informed and leave it up to the University. In our case, not being informed after 10 years of service, at retirement my mother due to the default process only recieves 700 and some change after taxes for approximately two years. Go figure. Imagine her amazment, my fathers and mine. The point of this personal story is that, like Human Resources said to me at Princeton, we leave it to the employees, and we provide them workshops that they can attend so the burden lies with them. Wow. I understand it, but wow.
I completely agree that we need to start learning what we can do to have a cushion like many others do at retirement. I know in light of many of times, in our Haitian community people try to scam us out of our money so we don't trust anyone, we can always get educated on what's out there and go to a reputable place that can invest for us.
Education is keen in everything. Education does not necessarily mean that of the books. Education is really about being or becoming informed.
How to Retire in Your 30s The financial freedom of a modest, early retirement is actually achievable for many smart and motivated people in college or their early 20s. If you make early retirement your highest priority in life and follow a disciplined path to obtaining it, you should be able to leave work permanently in your 30s and spend your life and time at your complete discretion. Here's how to start moving in that direction. Steps- Define the dream, while documenting the reality. How do you want to spend the rest of your life, post-retirement? Where do you want to live? What do you want to do? And most importantly of all, how much will it cost, year after year, for the rest of your life? This will tell you how much money you need to save and what kind of investments you're going to have to make in order to support your retirement lifestyle. Don't forget to include things like health insurance and the effect of inflation. Make a detailed spreadsheet to chart all these variables exactly.
- Make a lot of money. Perhaps the quickest, high odds way to do this is by focusing on landing a high paying job. Consider the types of jobs that pay extraordinarily well in exchange for hard work, little psychological satisfaction, and a punishing lifestyle. After all, you're not choosing a career in the sense that most people are, seeking lifelong satisfaction, as you hope to be only in this job for a decade. Focus on jobs that will reward the fact that you are willing to work harder than anyone else. Some suggestions:
- Investment banking - These Wall Street jobs can pay extremely well. In exchange, you sell your soul: the hours are a grind, the work is dull, and your boss is an egomaniac. But the goal is to get in, work hard and bank the money. Focus on delivering the results, and watch your peers melt away as they think "there's no way I can do this for 40 years" - you know you don't have to.
- Sales (positions in high-ticket industries, such as many high-tech enterprise software companies) - Because your pay is directly linked to your sales, and your sales are in a large part proportional to how hard you are willing to work, you can earn a lot doing this dull job of sucking up to corporate IT drones.
- Engineering - Software development, biotech, and other technical positions are high risk paths to wealth. Unlike the investment banking and sales which have high current income, many engineering jobs only hit the jackpot on chancy stock options.
- Lower your expenses. The #1 reason people in high paying salaried jobs are still working hard when they are fifty is because they can't keep their spending under control. To soothe their agony regarding their dull, demanding job, they placate themselves with toys that fail to make them happy: a penthouse apartment, a fancy car, a diamond ring. Resist the massive pressure to dress, eat and shop like your peers, and live a modest lifestyle. Focus on work, as your play will come later. Some keys to not spending:
- Rent a modest apartment. You will be at work all the time, so do not splash out on housing. Clean and small will do just fine. If you live in an area with low housing costs you can consider buying instead of renting.
- Don't eat fancy dinners. Unless you are a gourmet connoisseur, you have to admit that a $5 burrito tastes 90% as good as a fancy steak served on fine china.
- Keep a budget. Track your expenses. Set goals for saving and celebrate when you meet them.
- Invest wisely. It is beyond the scope of this how-to to explain exactly how to invest your money, but do the research and find a way to make your savings grow and work for you. The richest people invest in real estate and the stock market. Remember that the more you play it safe, the longer it'll probably take you to retire; on the flip side, the more you gamble, the more you risk losing your money and having to spend another year or more at your high-paying but miserable job.
- Keep your eye on the mark. Not everyone is cut out for the kind of life you're going to have to lead in order to reach such an early retirement. There will be many times when you feel like giving in and throwing in the towel. Have a very clear vision and several ways to remind yourself why you're doing what you're doing, because you'll need them.
Tips- While you will almost certainly want to work somewhere like New York, London, or San Francisco while you are earning your retirement, it is entirely impractical to retire there. Your goal is to sock away savings while living in an expensive city, then move somewhere cheaper. There are plenty of wonderful, affordable places to live in the US, or you can reach your retirement level even faster by moving to a cheaper country. There are entire colonies of retired Americans in cities like San Miguel de Allende, Mexico. One unfortunate outcome of this move is the distance it will create from your friends and family. This is one of the trade-offs you will have to make in order to gain financial freedom.
- To achieve an early retirement, a period of sacrifice and hard work is mandatory, and finding a partner who shares your ambition sufficiently to make that sacrifice will be difficult. Furthermore, finding someone who shares your vision for geographic relocation and kids, and will maintain that vision, is doubly difficult. You can pursue relationships, but you will have need more time and energy to focus on your career while you are earning.
- This approach to early retirement almost certainly rules out the enormous expense of having and raising many children, early. This is a decision you will need to make carefully. If you decide in haste, it may be a decision you come to regret. Remember with kids, milk, diapers, preschool and college savings is expensive.
- Remember that you only need enough money to last you for say, 80 years, assuming that you don't live to be over 115. This reduces your required nest egg size, since you do not have to live only off of interest, you can take out capital as well. If you can invest at 7% pa, you need $1,200,000 for a $50,000 (growing at 3% a year for inflation) income for the next 80 years.
- Even if you do not actually retire in 10 years because the money earned in this way may not result in the lifestyle of a lottery winner-millionaire, this is a good way to get ahead. If you accept to slog for about 10 years by following all of the above, you will have set aside a very nice nest egg, and be considerably ahead of your peers who chose the 'easy' route. You can then get out of that high-stress job and continue working ... full or part time ... in a different environment, while you monitor your nest egg and let time-value/compound interests do their thing.
- Even if you are "retired" you may wish to take up an enjoyable job, then you have no stress for getting fired, and you can supplement your nest-egg income to live really well, even on a teacher's salary, for instance.
- Consider just retiring from corporate America. Decide what you can live on and start doing something that you love from home.
Warnings- The retirement described here is a modest early retirement, not the "winning the internet lottery" type of retirement available to folks like Pierre Omidyar or Sergey Brin. This is a plan where hard work can get you most of the way , whereas the jet-set early retirees mix in a lot of luck and timing. As such, your retirement lifestyle will be significantly more modest than most people think of when they consider early retirement.
- Be aware this article is not titled "How to Be Happy". The financial freedom of early retirement described in this article requires sacrificing many things that most people believe are the greatest sources of happiness in life, such as friendships, having kids, or driving a Mercedes-Benz and wearing clothes with designer labels. It is critical that you are self-aware enough to understand whether the freedoms and benefits of retiring early will be sufficiently rewarding to offset the sacrifices suggested by this article. This is a question only you can answer.
- Unfortunately, if you're already in your late 20s, it may be impossible to follow this strategy for retiring in your early 30s. While controlling your costs may still put you in a better financial position, you will already be set on a career path that may be difficult to redirect. Your ability to get those high paying jobs will be in a large part the product of hard work and focus in high school and college, therefore develop the work ethic during those years to land that investment banking job.
- Consider that retirement may be boring. You may have a more fulfilling life by getting a lower paying job that you might enjoy and work until age 65.
Related wikiHowsSources and CitationsHow to Retire Faster
By Rex Moore July 8, 2006
3 Recommendations
Are you fretting about your lack of savings and the amount you're putting away for retirement? Well, me too. I always do. Today I want to tell you the best way I've found to accumulate money beyond setting aside part of your paycheck each month. It's fairly easy and fairly painless, and it could add up to hundreds of thousands of dollars by the time you retire.
Easy as 1, 2, 3 Here are three initial steps:
- Sit down. If you can get family or friends to sit down with you, the process is going to be much, much easier.
- Brainstorm and come up with as many ways as you can to cut at least $100 in expenses over the next year. (Charles Jaffe of MarketWatch recommends identifying eight ways to cut $500, because the resulting $4,000 is enough to fully fund a Roth IRA. I like that idea.)
- Over the course of the year, capture those saved expenses by dropping the money into a special savings account set up for this purpose.
Tips and other tidbits If you don't know where to start, let me offer some suggestions. Most of these are fairly painless because they won't really lower your current standard of living:
- Capture your next pay raise or bonus check and sock it away in the savings account. A 4% raise on a $50,000 salary will net you about $1,600 after taxes. That's a great start.
- Eat out just one less time per month. If that saves you $50, that will turn into $600 by the end of the year.
- Scan your recurring monthly bills to see what is sucking you dry for little in return. For instance, will it really affect you that much to cut back a tier on your cable TV plan or drop a movie channel? Sending $20 a month less to Comcast (Nasdaq: CMCSA), Cox, or EchoStar's (Nasdaq: DISH) Dish Network will save you $240. Don't forget to check your cell phone plan for superfluous features or needless extra minutes.
- And really, how hard would it be to deny Starbucks (Nasdaq: SBUX) or Krispy Kreme (NYSE: KKD) $20 each month for their coffee? Actually, it isn't very easy, I know. Both companies offer wonderful and addicting products. But if you can skip even just a couple of days a week and either bring your own java or brew some in your office kitchen, that's another $240 in the bank.
- Add up the moola you shell out for lunch. Don't be surprised if it's at least $200 monthly. Bringing your lunch to work two or three times a week will not only save you a lot of money, but it will also mean healthier eating. Nothing wrong with McDonald's (NYSE: MCD) now and then; I eat there myself and applaud the lower-fat offerings. But you can't beat feeling better and losing a little weight while you bulk up your retirement savings!
You (and your family and friends) can probably come up with several other ways of meaningfully cutting expenses. As you go through the process, you'll come to appreciate and understand how highly efficient companies such as
Anheuser-Busch (NYSE:
BUD) and
Procter & Gamble (NYSE:
PG) provide consistent profits and outstanding returns to shareholders.
Now put the money to work OK, so you're going to start socking the money away. Now, let me show you your potential payoff. Let's say you scrape together $4,000 each year:
Put your money in ... Which yields* 20-year payoff 34-year payoff
Mattress
0%
$80,000
$136,000
Bank savings account
2%
$99,133
$195,978
Index fund
10%
$252,010
$1,080,097
Index plus a few
12%
$322,795
$1,722,654
*Yields are approximate, based on historical data.
"Index plus a few" is a strategy that involves keeping most of your portfolio in an index fund. But if you have the time and skill (or the help) and want to add a little juice to your returns, you can set aside 5% to 10% for individual stocks. For some poetic justice, and to bring this article full circle, when I checked a few weeks ago a basket of the companies mentioned in this article returned an average of 415% over the past 10 years, versus the S&P 500's 106%. That even takes into account Krispy Kreme's great fall (and the fact that it's only been public for six years). Now that's how to
make money off these great companies, rather than give it away to them!
Start now
Of course, you needn't have stock-picking skills to enjoy the advantages of indexing. But if you want to try, a free trial to the
Motley Fool Rule Your Retirement newsletter will give you not only specific stock recommendations but also a host of mutual funds, bonds, and even savings accounts to consider. Here's
more information on the 30-day free trial.
This article was originally published on Jan. 13, 2006. It has been updated. Rex Moore captured his last pay raise, but it got away. Of the companies mentioned in this article, he owns shares of Anheuser-Busch and Procter & Gamble. Anheuser-Busch is a Motley Fool Inside Value
recommendation. Starbucks is a Stock Advisor
pick. The Fool has adisclosure policy. The Market's 10 Best Stocks Revealed
By Tim Hanson December 26, 2007
Comments (2)
As investors, we want the best stocks for our portfolios.
That's why, at the end of each year, I find myself looking back. I want to know the names of the best stocks of the past decade, and I want to know what we can learn from them.
What's incredible is that the market's 10 best stocks teach a clear lesson -- and it's the same lesson year after year after year.
See the best
We're a few days away from the end of 2007, but I couldn't help jumping the gun. Just take a look at this year's list:
Company
Return, 1998-2007
Jan. 1, 1998 Market Cap
Hansen Natural (Nasdaq:
HANS)
21,201%
$16.5 million
Asta Funding
8,252%
$3.1 million
Celgene (Nasdaq:
CELG)
6,771%
$129.0 million
Apple (Nasdaq:
AAPL)
5,959%
$1.7 billion
Comtech Telecommunications (Nasdaq:
CMTL)
4,246%
$11.3 million
Daktronics
3,493%
$23.1 million
Green Mountain Coffee Roasters (Nasdaq:
GMCR)
3,455%
$24.7 million
Clean Harbors
3,378%
$15.8 million
Innodata Isogen
3,135%
$3.1 million
Immucor
2,941%
$70.0 million
Data from Capital IQ, a division of Standard & Poor's. Includes only U.S. stocks listed with verifiable stock price histories on major exchanges. Be the best
Hansen Natural remains the top stock. It held that honor
last year as well as the
year before that.
And while the retailers from last year's list have dropped from the top 10, they've been replaced by names such as Asta Funding and Green Mountain Coffee Roasters that drive home the
exact same takeaway!
Buy the best
This list makes one key investing lesson explicitly clear. If you want to buy the best stocks of the
next 10 years, you need be looking at stocks
today that are:
- Obscure.
- Ignored.
- Small.
Those traits characterized these 10 best stocks when their remarkable runs began, and it's the same lesson we see over and over again. Ten years ago, Green Mountain was a boutique name from Vermont with just $40 million in annual revenue. Today, it's a nearly $350 million-per-year business that counts
McDonald's (NYSE:
MCD) and
ExxonMobil (NYSE:
XOM) as customers.
Even Apple wasn't a big name back at the beginning of 1998. Although Steve Jobs had just returned to help restructure the company, it was years away from the iPod or iPhone. Most of the market had lost interest in the stock.
Big ain't the best
But look at how many Wall Street analysts are searching for market-beating gains in Apple today. Twenty-seven analysts cover the company, even though it's become a $168 billion behemoth.
Where were they
10 years ago?
They were covering large caps -- the stocks with enough volume and liquidity to be worth Wall Street's time.
You don't need to play that game. You have the opportunity to make serious money by finding stocks today that, again, are:
- Obscure.
- Ignored.
- Small.
Start small in 2008
Uncovering these winners also happens to be our goal at
Motley Fool Hidden Gems. Rather than track Apple, we're tracking companies such as
Nuance Communications -- a company whose voice-recognition software has the potential to drive the next technology boom.
Yet even Nuance -- a $3 billion company -- is probably too big to be one of the market's 10 best a decade from now. That's why we also highlight Tiny Gems -- companies capitalized at $200 million or less.
To take a look at all of the small cap-stocks we're recommending today,
click here to try
Hidden Gems free for 30 days. You may not have heard of our companies, but we think that's exactly the point.
Tim Hanson does not own shares of any company mentioned in this article. Nuance Communications is a Hidden Gems
pick. The Motley Fool has a disclosure policy. The Best Stocks for 2008
By Jim Mueller (TMF Gebinr) December 31, 2007
Ah, the winter holidays! What better time for getting together with friends, parties, and presents, and for thinking about your investments?
"Wait a minute!" you say. "I was with you right up to that bit about investments."
That's right, Fool. The year's winding down, and we're all looking forward to starting the new one afresh. In fact, many of us will be making resolutions tonight to improve things for next year. So why not start a little early and spend some time with us at The Motley Fool and our investor-intelligence community, Motley Fool CAPS? You can think about your investments and ponder what stocks might be the best ones to invest in during 2008 and beyond.
To help, we've gathered a whole slew of ideas for you to consider and then rate as an "outperform" or "underperform" in
CAPS. And who knows? You may even decide to invest in one or two of these ideas for real -- after doing your
due diligence, of course.
Well-known companies such as
Johnson & Johnson (NYSE:
JNJ) and
General Electric (NYSE:
GE) make up part of our list of candidates. But we're also presenting you with some stocks you might not have considered, such as
Marvel (NYSE:
MVL) and
IMAX (Nasdaq:
IMAX).
IMAX? Well, why not? According to longtime Fool contributor Rick Munarriz, 2008 could very well be IMAX's year. The company just inked a deal to put 100 of its supersized screens into AMC's theaters. Consider that these new screens will be using the latest digital delivery system, and IMAX could be at the start of something big.
As for Marvel, Anders Bylund reminds us that it's coming out with self-produced movies featuring the Hulk and Iron Man. If either of those films performs as well as its co-produced movies featuring Spider-Man and the X-Men did, Marvel will be in the green in a major way.
Then there's that old standby, GE. Dan Caplinger points out that although the price hasn't budged much over the past three years, net income has continued to grow. Add in a decent dividend yield, and this venerable giant could end up outperforming many other stocks in the coming years.
You could also do well by investing in all-things-medical company Johnson & Johnson, argues Brian Orelli. Although J&J is experiencing some temporary difficulties with its stent business, there is enough going on at this company to make it a stable grower for some time to come.
There you have it: a brief look at some of the companies our Foolish writers think will be the best for 2008. And I didn't even mention the bank in our list (a
bank?),
Lloyds TSB (NYSE:
LYG), or that ever-popular seller of eggnog lattes,
Starbucks (Nasdaq:
SBUX).
Spend an hour or so with us reviewing the various companies. Then head on over to
CAPS and cast your vote by calling "outperform" or "underperform" on as many of these stocks as you like. Finally, come back in a few days, when we'll announce the company that you, our readership, think will be best for 2008.
CAPS: If you haven't tried it out yet, it's free, it's fun, and it might give you some good investing ideas.
Stocks That Cannot Be Stopped
By Chuck Saletta December 29, 2007
If you're serious about making money in the stock market, you need to start thinking like an owner, not a trader. Owners know two things that traders generally overlook:
- A share of stock represents a partial ownership position in a company.
- Over time, that company's operational results determine the wealth it generates.
In other words, when companies make money, their shareholders benefit.
Rocket science it's not
This connection is most obvious with reliable, dividend-paying businesses. Dividends are the most direct way a company can reward its investors for the risks they've taken by investing.
As important as the payment itself, however, is the message a dividend sends to the world. When a company initiates a dividend, it essentially announces that it has more than enough cash to reward its owners. In fact, a dividend is probably the
clearest signaling device in any company's arsenal.
Keeping the message strong
To see how well some firms do at signaling their fiscal strength, here's a list of firms from the "half-century" club -- businesses that have been paying dividends without interruption for at least 50 years:
Company
Current
Annual
Dividend
Paid Without
Interruption
Since
General Electric (NYSE:
GE)
$1.24
1899
Public Service Enterprise Group (NYSE:
PEG)
$2.34
1907
UST (NYSE:
UST)
$2.40
1912
Otter Tail (Nasdaq:
OTTR)
$1.17
1938
Snap-on (NYSE:
SNA)
$1.20
1939
Empire District Electric (NYSE:
EDE)
$1.28
1944
Allete (NYSE:
ALE)
$1.64
1950
Some of these companies can trace their consistent payments back a century or more! Just some of the "knock the world for a loop" events that couldn't derail the dividends from the longer-lived of these great firms include:
- World War I
- The Great Depression
- World War II
- The Korean War
- The Vietnam War
- The OPEC oil embargo
- Stagflation
- The Persian Gulf War
- Sept. 11, 2001
Through it all, these companies could not be stopped from rewarding their owners. Over such a long time frame, a single, modest investment, with dividends reinvested and compounded along the way, would add up to a sizable nest egg. Make a lifetime habit of owning the best of the best dividend payers around, and you and your family could wind up quite well off.
This is the logic we use to invest at
Motley Fool Income Investor. Strong companies that treat and pay their owners well make great long-term investments. Our market-beating results showcase just how well companies can perform when they focus on their long-term owners' needs. If you're ready to get serious about investing,
join us today.
This article was originally published on May 4, 2007. It has been updated. At the time of publication, Fool contributor Chuck Saletta owned shares of General Electric. He only wishes his great-great grandparents had owned some in 1899. Could you imagine what one share, bought back then, would be worth today, if all the dividends were reinvested along the way? Otter Tail is a Motley Fool Hidden Gems
recommendation. Snap-on is an Income Investor
pick. The Fool has a disclosure policy. 
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