Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Secret to Retiring a Millionaire

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

If you want to be truly wealthy when you retire, there's a simple thing you have to do. Sadly, though, many people have missed their best chance to become a millionaire -- and a new generation of investors are on a path to join them.

The most valuable asset any investor can count on is time. You may dream of finding 100-bagger stocks that will take your modest investment and make you rich without any effort. But unless you're destined to become the next Warren Buffett, you can't rely on that fantasy to make you rich. However, if you have time on your side, you can endure bear markets like 2008's financial crisis, weathering the storm and making it through to the recoveries that inevitably follow. And over the long haul, you'll be able to follow the general upward path that stocks have given investors for decades, and even take advantage of temporary downturns to load up with stocks on the cheap.

Let time work for you
As much as the market meltdown two years ago hurt investors with sizable portfolios, the damage it did to the mindset of young investors may have an even greater negative impact. According to a survey last year from the Investment Company Institute, just 22% of investors under age 35 want to take substantial risks in the financial markets. A separate survey showed that more than half of young investors are more conservative now than they were in 2009, and those young investors have made the biggest shift toward less aggressive investing strategies as a result of the financial crisis.

That may be the latest reason why young investors will be slow to start investing toward their long-term goals, but it's definitely not the only one. Consider some of the excuses that people have traditionally used to put off investing:

1. I just started my career; why think about retirement?
When you first join the workforce, money is almost always tight. With competing demands ranging from student loans and other debt to buying a first home or starting a family, retirement is easy to put on the back burner.

But starting early gives you an extra 10 to 20 years for your money to grow. Even if you can't afford to save much, by the time you retire, small amounts will have grown to large amounts. And more importantly, starting the savings habit early makes it easier to stick to your financial plan later in life.

2. The market's too risky.
There are plenty of reasons why now might seem like a terrible time to invest. The market is up more than 90% from its lows less than two years ago, and many stocks have seen even bigger gains. Stocks that came back from the brink of ruin, including Wynn Resorts (Nasdaq: WYNN  ) and Sirius XM Radio (Nasdaq: SIRI  ) , have seen stock prices multiply as much as 30-fold from those dark days in early 2009. Now, they're not just surviving; they're thriving, with the casino industry strengthening and Sirius turning profitable. A lot of easy money has already been made, and now many stocks seem expensive.

Moreover, some hot markets are starting to turn over. Emerging-market stocks are seeing pressure for the first time in a while -- with the iShares FTSE China 25 ETF (NYSE: FXI  ) down more than 10% from its November levels and India Fund (NYSE: IFN  ) off almost 12% since the end of 2010.

The superhot precious metals sector is also seeing a reversal. SPDR Gold Trust (NYSE: GLD  ) saw the biggest one-day outflow in its history yesterday. Mining stocks have plummeted in the wake of the recent fall in precious-metals prices, with Silver Wheaton (NYSE: SLW  ) having lost a quarter of its value just since the beginning of the year, and Freeport-McMoRan Copper & Gold (NYSE: FCX  ) off 13% in less than two weeks.

That said, there are always risks in the market. If you're always convinced that stocks are either too risky or not cheap enough, then you'll never invest. The key is to find investments that have the best long-term prospects no matter what may happen in the next few weeks or months.

3. I can't afford to invest.
Coming up with money to save is never easy. If you can only manage to come up with small amounts to invest, you might well think it's not worth it.

But over 40 years, it's not unreasonable to expect your money to double in value four or five times, meaning that $1 saved today will be worth $16 or $32 when you retire. That's not chump change; even if you can only set aside $25 or $50 a month right now, it could grow to thousands by the time you retire.

Don't wait another minute
Procrastination is always easier than taking action. But you can't afford to wait any longer. Starting to save and invest takes effort, but it's the best move you can make with your money.

Looking for the right stock to invest in? Read our special free report, "The Motley Fool's Top Stock for 2011," and learn about one smart stock that could be exactly what you're looking for to start your portfolio off on the right foot. Get instant access by clicking here -- it's free.

Tune in every Monday and Wednesday for Dan's columns on retirement, investing, and personal finance.

Fool contributor Dan Caplinger expects to retire a millionaire -- eventually. He doesn't own shares of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy looks forward to the food at those free investing seminars it makes fun of.

Read/Post Comments (27) | Recommend This Article (85)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 26, 2011, at 3:41 PM, mjtria wrote:

    It is pretty obvious that government wants to get out of the Social Security business. Corporations are scrambling to get away from pension funding. A couple of million foreclosures have demonstrated that home ownership is not a easy ride. That leaves the individual to prepare for their own retirement.

    There is a certain cachet to being a millionaire, but where being a millionaire 110 years ago meant an estate and servants, today it means a safe withdrawal rate of $40K adjusted for inflation.

    Pretty much all expenses, except medical costs, go down with time. But unless you are willing to spend your "golden years" eating dog food (which has less protein than cat food) you need to actively plan for retirement now.

  • Report this Comment On January 26, 2011, at 4:38 PM, Fundament wrote:

    Well let me advice you. At first, you need to maximize your savings. With this cash you need to invest in stocks that give you the money soon back. The sooner it returns to you, the better it is. This is the second rule: Buy stocks with high future cash flows for you (Dividends). And the last rule is: Buy stocks with moderate growth and further growth potential. If the company grow and return steady cash to shareholders, the share price will rise from alone. I researched some stocks that have brilliant growth performance figures realized. In average, the dividend stocks grew at double digit rates (12.76 percent) over the past ten years in sales and at 14.64 percent in earnings:

    The average yield is 4.0 percent.

  • Report this Comment On January 26, 2011, at 4:51 PM, daveandrae wrote:

    True story-

    I knew I guy that held General Electric stock for 37 years, amassing some 30,000 shares since 1973. I January of 2010, I tried until I was blue in the face to convince him not to sell out at 15.43, as a market price of 15.43 was the equivalent of a price to book ratio of 1.39.

    I illustrated that the last time this stock, was this cheap, was 1979. Ten years later, it was up TEN FOLD. Twenty years later, GE was up SIXTY FOLD.

    He sold out anyway. Put over 70% of his money in cash, in effect, losing well over $158,000 in capital appreciation and dividends over the 12 months alone.

    What is the moral of my little story?

    1. It does not matter what you can "prove", without "FAITH", the investor, sooner or later, will make the "BIG MISTAKE"....i.e...this is different.

    2. Time and time again, history has shown that "this time is different" are the four most expensive words in financial history.

    3. The secret is, there is no secret! ...Buy low, and HOLD!

  • Report this Comment On January 26, 2011, at 5:00 PM, nivekluap wrote:


    I found a wonderful way to save and invest with alot of good advice for both.......The Motley Fool!

    I'm a Stock Adviser member as well as Rule Your Retirement. I probably read more than most about investing because I find it interesting and can see how powerful time and compound interest is. Thanks to the Fool and Fools my portfolio is up 50% CAGR (compound annual growth rate) since Jan. 2009. Keep the good articles coming!


  • Report this Comment On January 26, 2011, at 5:15 PM, mikecart1 wrote:

    I don't buy into the time all that much anymore. I am still in my 20's and yes time is a factor and yes I'm been investing since 21 seriously. However, I believe it takes more intelligence than time to really build up money. Any 40 or 50 year old around in 2008-2010 could have easily "caught up" if they paid attention to market and particular oversold companies and put aside the fear of losing "everything". A person at 50 that is supposedly behind by 15 years in investing could have dropped $20-30K on SIRI at $0.05 and be sitting on around $750,000 now on that stock alone. This isn't far fetching. I would expect a 50 year old to be able to put together $25,000 as risk money on a stock like SIRI.

    Bottom line, time is important but way overrated.

  • Report this Comment On January 26, 2011, at 5:57 PM, TMFAleph1 wrote:


    I don't find your counterexample very convincing. One successful casino bet selected in hindsight is hardly evidence that it is easy to catch up with regard to an underfunded pension.

    Alex Dumortier

  • Report this Comment On January 26, 2011, at 6:05 PM, TheDumbMoney wrote:

    I have a friend who is much older than me, he's in his early fifties. He has been investing in his 401k and other mutual funds for twenty-five years. His strategy is as follows: Set a porfolio allocation of various ETFs, Bond Funds, Mutual Funds, on January 1. Automatically put in money all year, in those allocations. The next year, on January 1, rebalance to his prior allocation, and repeat. He has never even owned an individual stock. ETFs are recently added by him in the last five years, but after 25 years of this, his portfolio now increases in value by more than the value of his now-considerable (but now previously) annual salary, per year, except for a decline in 2008. That is the power of time (and rebalancing instead of emotion-buying/selling). And it started with simply putting in a couple hundred bucks a month in the early eighties.

  • Report this Comment On January 26, 2011, at 6:59 PM, BlackSwanCapital wrote:

    @TMFmarathonman and Mikecart1

    I agree with Alex here, being able to shove "all-in" is not the operative point. It's easy to say in hindsight that a certain decision is obvious, much harder to commit hard-earned money on the line and walk the walk.

    I could somewhat understand if you were tranching into BP during the gulf mess, but SIRI at $0.05 for 25k in one shot? No bueno. Why didn't you go into SIRI at that price?

  • Report this Comment On January 26, 2011, at 7:35 PM, DarylDad wrote:

    I read motley fool and have belonged to other websites and buy stocks recommended and have made money however my cousin's husband just bought SPY when the market crashed and he has done much better without the commissions.

  • Report this Comment On January 26, 2011, at 9:23 PM, Sonogoom wrote:

    since I'm already old I'm working on plans for a WABAC machine!!

  • Report this Comment On January 26, 2011, at 11:18 PM, uoptrader wrote:

    I am 21 and have been investing since middle school! gotta love compounding interest!

  • Report this Comment On January 27, 2011, at 12:00 AM, Merton123 wrote:

    I read the book "Millioniare Next Door" by Thomas J Stanley. He discovered that the majority of the millioniares are self employed, live frugally, and remained married. The majority of the billioniares in Forbes 500 didn't make their money through investing. They made their money by helping their business grow (e.g., Walmart, Microsoft, and so-forth). The millioniare next door ownes the local grocery store, is the plumbing contractor, runs the local McDonalds Franchise. I work as a state employee and live on half my salary very comfortable. The secret is to have hobbies that don't cost a lot of money after work (e.g., I go to the gym, am a member of the FreeMasons, and play Dungeons and Dragons). I have friends who like to eat out, go to movies, and basically spend their afterwork hours spending the money they earned during the day. They are the ones who constantly complain that they don't make enough money. I have other friends who take their families after work to the YMCA after work and have very happy family lives and are not financially strapped. Both group of friends make roughly the same amount of income but because of their lifestyle choices have very different experiences in relation living on a salary.

  • Report this Comment On January 27, 2011, at 12:31 AM, georacer wrote:

    The best thing you can do is live within your means and save, never owe money on a credit card, buy a house at a reasonable cost and put 100% of your savings into blue chip stocks (no speculation!). Ride out the highs and lows of a irrational market, and have the dividends of your investments compound and grow your portfolio so it's available to you when you grow old. By the time you are too tired to work you will no longer have a mortgage payment and you will have a nest egg that has compound for decades to fall back on. The best holding time for a investment is forever! Following these rules will spare you the pain of debt, and the joy freedom of capital allows you.

  • Report this Comment On January 27, 2011, at 7:55 AM, marc5477 wrote:

    Im one of those that took the chance and made out like a bandit since '08. I started investing during the tech bust when I was around 22. I dont want to echo what others have said so I will just add a couple of thing.

    1 - never trust any one with your money and dont depend on anyone to help you retire or live.

    2 - Fear is sometimes a good thing but be careful not to let it rule you.

    2b - The above only applies if you are somewhat educated in history, economics, business, finance, and a little math else you are just gambling.

  • Report this Comment On January 27, 2011, at 10:02 AM, Mary953 wrote:

    Merton has the right of it, as does Marc and Georacer. Compounding and some "safer" investments. Dividend paying, blue chip and mid-caps are on amazing sales right now and will pay out wonderfully if you can hold on to them. My additions would be to try and direct deposit 5% of at least your net income and don't touch it short of a medical emergency. And never, ever leave any matching money from a company savings plan on the table - That is part of your salary that you are burning if you do! A great newsletter to give you some pre-vetted ideas to start with completes the list and TMF has the best I have found at reasonable prices. Buy a couple of shares at a time if necessary through a discount broker.

    Nivekluap, I am investing in the same way you are - Stock Advisor is fantastic for me for right now. Earlier, I used Hidden Gems first because I was younger and could recoup if I lost, so I took greater risks. In fact, I still reserve a certain portion of my portfolio for the risky stocks - at the moment, AAPL, ARRS, SIRI, MGIC. NFLX has left the portfolio but not before heading from $95 to $200. Those are fun, but they do not jeopardize my retirement because they are a small percent. Dumberthanafool's friend is more methodical than I could stand to be. (Dumber, you know that your name is one of the most misleading on this whole site, don't you?)

    With the exception of Uoptrader (Wow, investing since middle school? Look for a bio of Andrew Carnegie if you get a chance. You may note a resemblance), most of us don't get 'ahead' even with compounding until the kids are on their own with the big college and wedding expenses out of the way. If you are looking at your age and savings and wondering when it is your turn, give it a couple of years if you haven't got those big expenses behind you.

    Great Article, Great Ideas, Dan!

  • Report this Comment On January 27, 2011, at 11:07 AM, wolfman225 wrote:

    I've recently had to start over at age 47. Recently divorced, I have managed to eliminate all outstanding debt (other than my house, which is currently rented) and have built up an "emergency fund" of 6-months expenses (in cash).

    After managing this, at the first of this year I resumed a 401k. Not having a lot of individual options, I have made the decision to pursue a rather aggressive stance. Since I have so little time till retirement (20 yrs) I simply have no option if I am to even contemplate retiement at 67. I am invested 100% in stocks, spread among small/mid-cap growth and blue chip value funds, with 5% of my allotment given to international exposure. My current investment is 20% of pre-tax earnings. I am also investing the max of $5000 in a self-directed ROTH IRA. As a sort of balance to the previous aggression, the ROTH is more a pure dividend play, using a modified DOD approach. I plan to have some of the taxable income from the 401k distributions offset by the tax-free income from the ROTH.

    Given the combination of the two, using retirement calculators I have come up with a final nest egg of just under $1M. If I go until 70, that grows to nearly $1.5M!

    The biggest thing I can offer to get people who may be in similar situations to get started is to not get lost in the "if only's". If you spend too much time regretting unrealized gains, you'll never begin. If I had started in my 20's, I could've retired at 55 with over $5M but the past is past.

    Start from wherever you find yourself today. Carpe Diem! Make a plan to pay down your existing debt asap. Eliminating those interest payments will be the same "gain" as an equivalent investment. Once you have cleaned up your past, THEN make plans for the future.

  • Report this Comment On January 27, 2011, at 11:55 AM, TMFGalagan wrote:

    Thanks so much to all of you for the great comments here. It's awesome to hear so many people making the most of their own situations and taking positive action. Good luck to all of you!


    dan (TMF Galagan)

  • Report this Comment On January 27, 2011, at 3:14 PM, akbarcaskey678 wrote:

    I completely agree. I'm 19 and I am tired of hearing people my age talking about a conservative portfolio. 20 year old juniors in college talking about bond portfolios and how equities are too risky. They sound like my 86 year old grandmother. Pansies!

    Buy some call options on high flyer stocks like CRM APKT NFLX MCP- take a risk to live a little. The Dow is at 12,000. When will people realize that this recovery is for real and have missed out on the Dow almost doubling!

  • Report this Comment On January 27, 2011, at 4:31 PM, ltangel wrote:

    any one have any thoughts about the Hain foods as a stockpick?

  • Report this Comment On January 28, 2011, at 3:43 PM, carpeman123 wrote:

    Time is also intertwined with a little something called Dollar Cost Averaging. It's the most powerful tool/strategy I know, and it's simple. By just consistently putting money into your 401K every month you can always bet that you are not missing out when the market is down to pounce on cheap prices. Granted you may be putting in when the market is high, but no matter what you will come out on top given a long time period as this article suggests. I can breath a sigh of relief that when the market crashed Icontinued to put into emerging markets, international, and large and small cap stocks.

    I am also relatively young and started putting into my 401K when I was 23. many of my friends think their is no need to invest and they couldn't be more wrong. If you are in your 20's invest as much as you can and get ahead of the game.

  • Report this Comment On January 28, 2011, at 5:22 PM, tomollie wrote:

    Fellow Fools - I need advice - am holding 400 shares of YUM that was recomended by Advisor this Fall. Bought at 50.50 and currently at 47.

    Should I run from this one before it falls more or is it one I should hold - Tomollie

  • Report this Comment On January 28, 2011, at 7:39 PM, kasbahgarp wrote:

    The real 'secret' to retire as a millionaire is to be born one...

  • Report this Comment On January 30, 2011, at 7:10 AM, ChTor wrote:

    I am 46 years old. I currently have no investments, but I would like to start investing; not only for my future, but also for my children and my 2 grandchildren. I have $5,000 to invest now -and I can invest approximately $1,000 per week for 8 months out of the year.

    Any suggestions?

  • Report this Comment On January 30, 2011, at 7:15 AM, ChTor wrote:

    What if you die before retirement? Think of the fun you might have had with that money then, though.

  • Report this Comment On January 31, 2011, at 8:27 PM, JamesRCoulter wrote:


    I think, in that case, your children will be very pleased you had the foresight to invest your savings in stocks.

    But of course, you could always screw the children and blow your savings on liquor and women.

    Thats my plan anyway.

  • Report this Comment On February 01, 2011, at 2:59 PM, 123spot wrote:

    ChTor, There are several recent and good MF articles on creating a diversified portfolio from about 5 ETF's ( exchange traded funds, ie one large cap, one small/mid cap, one international, one REIT, etc. ). A little in each ETF over time, adding as you can, may be the best way for you. Search under "Investing Commentary" above.

  • Report this Comment On February 01, 2011, at 3:01 PM, 123spot wrote:

    Also, Ch, use a discount broker- watch your expenses.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1429558, ~/Articles/ArticleHandler.aspx, 10/22/2016 11:39:49 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
FCX $10.04 Down -0.17 -1.67%
Freeport-McMoRan C… CAPS Rating: ****
FXI $37.83 Down -0.02 -0.05%
iShares FTSE/Xinhu… CAPS Rating: **
GLD $120.83 Up +0.09 +0.07%
SPDR Gold Trust CAPS Rating: **
IFN $24.58 Up +0.06 +0.24%
The India Fund CAPS Rating: *****
SIRI $4.15 Up +0.02 +0.48%
Sirius XM Radio CAPS Rating: **
SLW $24.33 Down -0.08 -0.33%
Silver Wheaton CAPS Rating: ****
WYNN $95.27 Down -0.73 -0.76%
Wynn Resorts CAPS Rating: ****