Let's make sure we've got this right:
- Markets still around 30% below their 2007 levels? Check!
- Housing market still in dire straits? Check!
- Savings accounts are earning next to nothing, at banks that are still dealing with ongoing loan quality problems? Check!
Hmmm. That filly in the third at Aqueduct seems to have closed pretty fast in her last race -- maybe taking what's left of my retirement savings and betting it all on her to win isn't such a bad idea after all.
Check that thought
Yes, even with a big bounce last year, the stock market is far from out of the woods. But although the market hasn't bounced back to get rid of all of its losses during the last bear market, this still may be one of those rare moments in market history where we have the opportunity to create fabulous wealth to secure our retirement years.
Yet few answer the call. Research shows that nearly half of all workers in the country have less than $25,000 in total savings, and more than 20% have no savings whatsoever. Despite the gloom that permeates the newspapers, we might want to consider how fortunate we were to have seen the market go on sale right, when we needed to add money the most!
Cozy as an old sweater
These ideas may be as familiar to you as your Labrador retriever. But considering that outside of employer-sponsored plans, many people save virtually nothing, our loyalty to these concepts should not waver.
Stocks remain the best way to save for retirement, and there's no better time to begin than when they go on sale. If you don't have the fortitude to invest in individual stocks, choose mutual funds that do.
There are a number of high-quality, low-cost managed funds that have done well. Sequoia (SEQUX) follows a tradition of buying excellent businesses at good prices, which founder William Ruane learned alongside Warren Buffett while studying under Benjamin Graham. Investing in Buffett's Berkshire Hathaway
On the other hand, if you want to choose your own stocks, do so carefully so you can reap the rewards at retirement. Choosing consistent dividend payers like Procter & Gamble
The smart bet
Just as mutual funds may be a perfect substitute for buying stocks when you don't have the time or knowledge to research them on your own, a subscription to Rule Your Retirement may be the perfect substitute for hiring a financial advisor with possible conflicts of interest. You want to make sure your advisor isn't trying to sell you something that will fund his or her own retirement, rather than ensuring your success.
Which steps should you take right now? For starters, make sure you're contributing at least as much to your 401(k) as necessary to earn any matching contributions from your employer. Then invest some money in an index fund. With the S&P 500 still well off its record highs, you'll be buying many more shares of the market when it's supercheap. After that, you can begin your search for mutual funds like Sequoia to invest in, or individual stocks like the dividend payers above, which will pay you to wait for share prices to bounce back.
A time to remember
There are many stocks we can choose to retire on. Given how important a secure retirement is, deciding which path offers us the right opportunity is key. Whichever way you go, though, the most important thing is to get started today.
Test-drive the Rule Your Retirement service with a 30-day risk-free trial run that gives you full access to the wealth of knowledge that the analysts there share every month. Just click here for more information.
