- Earn more than you spend. And SAVE the rest.
- Look out for Number One: it is your responsibility to save for your own retirement. There’s no one better to advocate for your future than YOU.
- Everyone should annually calculate his/her NET WORTH and have a SPENDING PLAN (a.k.a. budget) which includes saving and investing.
- During your years of employment, maintain an emergency cash reserve of 6 to 9 months of expenses.
- During your retirement years, maintain a cash reserve in laddered bonds equal to approximately two years of your required living expenses.
- AT MINIMUM, save (and invest) 10% of your annual income for retirement.
- Remember, the historic (1928 to present) average total rate of return for a diversified portfolio of U.S. stocks is approximately 10%. The average total rate of return for a diversified portfolio of domestic bonds for the same period is approximately 5%. The average rate of inflation for the same period is 3.5%
- For the money needed for retirement, the allocation for bonds should be equal to your age. If your are 40 years old, for instance, invest 40% of this money in bonds and the rest in stocks.
- Simple investments with low fees produce the highest returns.
- Generally, withdrawing only 4% from your retirement nest egg each year (based on the prior year ending value) means your portfolio will last your lifetime, even taking inflation into consideration.
- Never invest in a financial product that you do not completely understand.
- If it sounds too good to be true, it probably is!
