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Three Simple Steps to Retiring a Millionaire

Three Simple Steps to Retiring a Millionaire
May 09
11:12 2017

(TRUEMARKETHAVEN) – Are you on track toward a million-dollar retirement?

If you answered no, you’re not alone.

In fact, according to a recent survey by Time Magazine, 1 in 3 Americans has exactly $0.00 saved for retirement. Even more startling, 23% have less than $10,000 saved.

That means that 56% of all Americans have less than $10,000 saved for retirement. That’s downright scary.


What’s even more troubling is the fact that 42% of Millennials (people between 18 and 35) have not begun saving for retirement either.

I’m afraid this generation is well on the way to making the same mistakes many of their parents and grandparents made.

But here’s some good news. A million-dollar retirement can be an easy goal to achieve.It just takes the discipline to follow a simple three-step plan.

Taken together, these steps are so powerful, not only can they hand you a million-dollar retirement, it can get you their seven years faster.

Imagine having an extra seven years to do anything you want. Travel the world. Buy a vacation home. Or simply live life with less worry and more leisure?

Sounds great, right? You can start your journey toward that goal right now.

You may be saying to yourself that it’s going to take a CEO-sized salary or a bottomless appetite for risk to even come close to building that kind of nest egg.

But that’s not the case at all.

In fact, if you make a little less than $60,000 per year, you have enough to build a million-dollar retirement.

So let’s begin…

STEP 1–You need to commit to saving a portion of your annual income.

Sounds like a no-brainer, right? Yet, as we just saw, far too many Americans fail to set aside anything at all for retirement.

So setting up a simple plan to save a modest portion of your income is the first step to becoming a millionaire. It feels like a small step at first, I know. But take it from me, if you don’t take time to do this, you’re almost definitely taking a future million-dollar retirement off the table.

Say you make $60,000 per year. if you can set aside $5,500 or roughly 9% of your gross income towards retirement, you’ve taken the first step.

That amounts to $458 per month. Ideally, you’ll want to set up an auto draft payment that will withdraw your funds from a checking account to fund an investment account. Setting up the auto draft helps you stay focused on your millionaire retirement goal.

STEP 2—You need to set-up a tax advantaged Individual Retirement Account (IRA).

It’s free, it’s easy, and because of it, trading in and out of investment securities has never been cheaper. Most transactions cost less than a cup of coffee at your favorite cafe. And in some case, commissions are waived. So if you haven’t opened up an IRA, do it today!

An IRA is a great investment vehicle for building wealth because not only are the capital gains tax deferred, but the annual contributions are tax deductible. In other words, good ole’ Uncle Sam will be helping you become a millionaire while also reducing your income tax bill. And currently, the annual contribution limit in an IRA is $5,500 per year ($6,500 if aged 50 or older), so you are right at the limit.

The contributions can be made as a lump sum or at periodic intervals. The periodic contribution is great for smoothing out the volatility in the investment portfolio as prices oscillate throughout the year. The result is that you’ll be “dollar cost averaging” your contributions. This takes the emotion out of your saving decisions.

Once you’ve taken those first two steps, you’re well on your way to a million dollar retirement.

So Congratulations!

You see, by taking a simple approach, such as investing $5,500 per year for 30 years, you’ll find that a $165,000 principal investment could turn into $1,036,000.

The power of compounding is what makes this financial miracle possible. Compounding is simply the ability to generate earnings, which are then reinvested in order to generate additional earnings.

And the example of turning $165,000 into a little more than $1 million is based on the historical annual return of 9.5% for the U.S. Stock market dating back to 1927.

In other words, in the long run, investors can expect a 9.5% return annually by simply buying and holding securities that track the performance of the broad stock market.

But what if I told you that there is a way that could turn that same $165,000 principal investment into $3 million during the same 30 year period? Or better yet, meet your million dollar retirement goal not in 30 years, but in only 23.

There is a way to do that. And it can be done without really taking on any additional risk.

If you like the sound of that, then you’ll want to pay close attention to the third step; it’s the crucial step, because this is the secret sauce to growing wealth at a faster pace.

It also happens to be the cornerstone of our investing approach at True Market Insider.

Step 3—Relative Strength Investing can get you to your retirement goals quicker.

The Relative Strength methodology essentially measures how one security is performing against another. There are all sorts of ways to analyze relative strength, but long story short, a relative strength calculation can be performed on anything.

At True Market Insider, we use Relative Strength to identify which parts of the overall market are strongest and which are the weakest.

You see, if you can strip away the parts of the market that are underperforming and invest in the parts that are outperforming, you’ll likely have a better opportunity to generate a higher return. This will increase the speed of compounding.

And based on a research study by Dorsey Wright & Associates, momentum strategies such as Relative Strength investing has beaten the Total Market return by 4.6% based on a comprehensive back test study.

In other words, since 1929, instead of generating a 9.5% annual return, investing in only the strongest parts of the market would have generated at 14.1% return. And during that long span, the difference in annual yield — although it seems small — actually increased the value of a portfolio more than 66 times over.

That’s wha’s possible when you combine compounding with Relative Strength investing!

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