Retirement Investing for Cheapskates

Serious savers know that if they want to build wealth over the long haul, now is the time to get going. But how, exactly, does one get going?

Good question.

Why not start with an asset-allocation plan? Such a plan should take into account your investing timeline, your tolerance for the market's inevitable performance gyrations, and what we might call your investing style -- where your temperament falls on the growth/value spectrum.

Once you've filled in those all-important blanks, the serious fun can begin. You can start shopping for picks to fill your personalized pie chart.

Cheapskates of the world, unite!
Cheapskates have a much better shot at making it to a lavish retirement than spendthrifts -- particularly if they follow these three steps:

1. Take advantage of the tax-friendly savings your 401(k) plan provides -- not to mention any matching contribution your employer offers.
2. Keep the taxman at bay via a Roth IRA. Yes, you'll have to contribute after-tax dollars, but your savings will grow tax free. And when it comes time to draw down the account, you won't have to pay Uncle Sam for the privilege of doing so.
3. Consider stuffing your taxable investment accounts with stocks plucked from the market's sales rack.

Take your temperature
No matter what your investing temperament happens to be, anchoring your portfolio to discounted overachievers is a smart way to proceed. You can do that through choice mutual funds, of course, but if you prefer to pick the stocks yourself, Mr. Market is currently selling quite a few stalwarts at a nice discount.

Microsoft (NASDAQ:MSFT), for example, has cranked out an annualized, market-crushing return of more than 17% in the past 10 years. It currently trades roughly 29% below its five-year high and with price-to-earnings and price-to-cash flow multiples that fall below its industry's average.

Avon Products (NYSE:AVP) is another of the market's long-haul overachievers -- and a healthy dividend payer to boot -- yet its stock is more than 30% off its five-year high. St.Jude Medical (NYSE:STJ), Intel (NASDAQ:INTC), TXU (NYSE:TXU), Dell (NASDAQ:DELL), and Chesapeake Energy (NYSE:CHK) all strike similar -- and attractive -- profiles. Each has delivered the goods for shareholders over a lengthy stretch of time, and yet -- for the time being, anyway -- they all sport valuation profiles that look downright juicy.

Hot topics
Make no mistake: There's more to smart stock selection than just spotting companies that seem to be trading on the cheap, just as there's more to smart retirement preparation than mere stock picking. Whether or not you're saving enough to meet your future needs is a huge consideration, as is the appropriate draw-down rate once you start using your investment portfolio for living expenses. (Fool retirement guru Robert Brokamp advises 4% as the retirement draw-down rate.) Getting the allocation levels right across the major asset classes (cash, cash equivalents, stocks, and bonds) is yet another hot retirement topic.

Not coincidentally, you can learn more about all of this at the Fool's Rule Your Retirement service. Led by Robert Brokamp, each monthly issue comes packed with news and information designed -- as the service's motto goes -- to help you plan well and retire wealthy. And here's something that really ought to appeal to your inner cheapskate: A 30-day guest pass is yours, free, for the taking.

A guest pass provides access to all Rule Your Retirement back issues, as well as its members-only discussion boards and retirement planning tools. You're under no obligation to subscribe. Click here for more information.

Shannon Zimmerman is the lead analyst for the Fool's Champion Funds newsletter service and doesn't own any of the companies mentioned. Microsoft, Intel, and Dell are Inside Value recommendations. TXU is an Income Investor recommendation. Dell is also a Stock Advisor recommendation. The Fool has a strict disclosure policy.