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Retirement Investing Strategies to Build Wealth

May 14th, 2019 at 09:50 pm

The road to retirement can seem long and complicated. In fact, some of the choices that are made during this journey can be the most important decisions a person will make during an entire lifetime. This is why retirement planning must be conducted in a sober, rational fashion. Proper research and learning must be undertaken so that mistakes are not made in the earliest phases. Of course, it is never too late to start building your investments to achieve wealth in the future. Proper planning, however, can help ensure that the process is much easier along the way.

Separate Emotions From Financial Objectives

As is the case with any financial choice, emotional reactions should play no role"> in the decision-making process. Any time a potential investment is viewed subjectively (rather than objectively) what is really sacrificed is the element of security that comes with a rational decision. Logic, not emotion, is what leads to the formation of proper judgment and best performances. This includes the willingness to view investments and budgeting finances in a new light. As always, the goal is to seek value and to build wealth over time. (Learn more: https://www.huffpost.com/entry/money-is-not-about-financ_n_7...).

For example, if a person establishes an IRA, contributes $1,000 each year (from age of 20 to the age of 30) and then ceases all contributions, over $168,500 will accumulate by the age of 65. If the same person established an IRA at age 30, invested $1,000 each year (for 35 years), only $147,900 would have accumulated by age 65. This example assumes an annualized return of 7%. But, even more than the specific numbers, what it really tells us is that time matters. Preparing early can pay dividends in ways that few financial factors can. These are the ways the world’s best investors approach their finances, and this is how the best long-term results are typically achieved.

Realize the Financial Power of Stock Markets

After the 2008 global financial crisis, stock markets were on the receiving end of a lot of investor criticisms. Many of these negative arguments include fair points and there were lessons to be learned after those events occurred. But what many were missing at the time was that stock markets have actually been one of the greatest wealth creation outlets in the history of human culture.

As a way to keep pace with inflation, can protect savings and build wealth better than perhaps any other asset class. Over the last 100 years, the S&P 500 has produced returns of roughly 10%. As a point of comparison, the Federal Reserve aims to maintain consumer inflation levels at roughly 2% each year. This is a substantial difference, and it can lead to sizable wealth accumulation in the decades that lead to retirement. So, if you are interested in stock-specific trading strategies or a broader approach to index funds, it is usually better to be in the stock market rather than waiting on the sidelines. (Learn more: https://www.asktraders.com/guides/stocks-watch/).

Always Diversify Investment Portfolios

But this does not mean every stock investment is created equal. While some stocks may perform tremendously well over time, others may not. Since it is impossible to know the difference with 100% certainty, it is absolutely essential for investors to diversify their portfolios in a rational manner. Diversifying across asset classes can help avoid the risks of loss that are commonly found in non-diversified portfolios. (Learn more: https://www.fidelity.com/learning-center/investment-products...).

2 Responses to “Retirement Investing Strategies to Build Wealth”

  1. veronak Says:

    Great read

  2. Richard Cox Says:

    Thank you!
    Much appreciated

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