The Long Term Investor

"Retirement money is like oxygen. It's kind of important that you don't run out"

Above is TOTALLY TRUE......retirement requires a very different mind set for any investor. the name f the game switches from the excitement of gains and making money......to long term management and preservation of money and lifestyle.

 

I like this little article....especially today with the current media headlines and focus.

Inflation’s Fix: Patience, Not Policy
The Fed still can’t do anything to fix the supply shortages driving inflation.

https://www.fisherinvestments.com/en-us/marketminder/inflations-fix-patience-not-policy

(BOLD is my opinion OR what I consider important content)

"Friday, the US Bureau of Labor Statistics (BLS) unveiled November’s Consumer Price Index (CPI) report, which has been a key focus for investors and analysts all year, given lofty readings. The report didn’t disappoint all the antsy analysts, with the CPI rising 6.8% y/y, the fastest rate since June 1982. It all compounds inflation fears, which have many pushing the Fed to respond with a faster wind-down of quantitative easing bond purchases and rate hikes. But in our view, the likelier fix for quick-rising prices of late is simply patience, not monetary policy—much of the influence on prices is outside the Fed’s control.

That 6.8% y/y rate got most of the media attention this morning, but it isn’t all that meaningful. As we have noted many times on these pages, calculation quirks in year-over-year mathematics are inflating the headline figure. Consider energy prices. As Exhibit 1 shows, November 2021’s CPI Energy component notched an index level of 259.1. This has risen steadily over the past year as oil prices ticked up. But in November 2020, the index level was 194.4—down markedly from the January 2020 pre-pandemic mark of 213.0.

Exhibit 1: CPI Energy Index’s Lingering Base Effect


Source: FactSet, as of 12/10/2021. US CPI Energy index level, November 2006 – November 2021. Figures are not seasonally adjusted.

BLS data show energy’s 33.3% y/y rise added 2.01 percentage points to the headline CPI rate—the biggest contribution since September 2005 (in the wake of Hurricane Katrina) and an unusually big addition given energy comprises 7.5% of the CPI’s basket of goods and services.[ii]

But even if you look at core CPI, which strips out food and energy, lingering pandemic effects still skew the 4.9% year-over-year rate. New and used cars, hit hard by the well-publicized semiconductor shortages, are up 11.1% and 31.4% respectively over the past year—adding 1.3 percentage points to the headline rate.[iii]

None of this is to totally dismiss the impacts of inflation lately, but we think it is far more proper to set aside the headline-grabbing year-over-year rate that so many point to as notching records. Instead, look to month-over-month figures. In November, CPI rose 0.8% m/m, down slightly from October’s 0.9%.[iv] (Excluding food and energy, prices rose 0.5% m/m, down from 0.6%.) These are still relatively quick rates by historical standards, and the headline rate has accelerated sharply since slowing to 0.3% m/m in August, which matched the historical average. But that acceleration stemmed primarily from energy’s autumn surge. Moreover, November’s headline and core month-over-month rates are a slight deceleration and aren’t at the 39-year highs the more skewed yearly gauges are. Furthermore, they still show influence from the pandemic’s effects: Energy and transportation goods (think: cars) were the first and third biggest contributors to the headline rate of change, areas showing great influence from the lockdown and reopening trends (and energy prices are down of late, which may lower future readings, if this trend holds). They added 0.26 and 0.14 percentage point to the monthly headline CPI change. That is about half the month’s overall rise—in two categories that total about 15% of the overall CPI basket.[v] That trend—outsized increases in narrow categories—underpins much of the recent spate of high headline inflation readings.

Second was shelter costs, including rent and the government’s attempt to estimate changes in home ownership costs (owners’ equivalent rent), which no one actually pays. While rents likely are climbing for some, very few people see price changes in rents on a monthly basis. Homeowners see even less impact, considering the vast number of homes owned outright or via fixed mortgages.

Regardless, the fast-rising metrics have many clamoring for the Fed to dial back QE faster or hike rates sooner. Now, we have long argued QE isn’t inflation fuel to begin with. But even if you disagree, ask yourself: If the Fed slows bond purchases and/or hikes rates, will that somehow boost semiconductor production, easing the pressure on car prices? Will it boost wind power production in Europe, easing demand on natural gas and oil as substitutes? We think the answers are no and no, illustrating how the present issues are on the supply side, not tied to hotly inflationary Fed policy. While we have no reason to think dialing back QE or hiking rates threaten the bull market, we also think they are unlikely to quell CPI’s climb.


No, accomplishing that will take something more complex: Market forces. High and rising prices in certain categories encourage more production, which should ultimately cool inflation. We are already seeing this in energy production and semiconductor investment. It may take a little time, but, in our view, patience while market forces work is the path to slowing inflation—not Fed policy shifts."

MY COMMENT

It is obvious that supply issues in every category are causing the price increases........or at least are causing the consumer and producer behavior that is driving prices. BUT......this does not matter.....in fact nothing matters except for what people believe. If they believe something it is REALITY.

I am serious when I say this and I believe it.....there is no such thing as FACT. Fact is whatever society believes it is. The earth is flat.......well it is if the VAST majority of people say it is. It does not matter what is true or not......if common knowledge says something is true.......it simply is. The ACCEPTED TRUTH drives society, government, business, etc, etc, etc........everything......at least over the short to medium term.

 

Here is the.......media......story of the day. The story of the day yesterday was the OMI variation.

Wholesale inflation jumps record 9.6% over past 12 months

https://finance.yahoo.com/news/wholesale-inflation-jumps-record-9-134429918.html

(BOLD is my opinion OR what I consider important content)

"Prices at the wholesale level surged by a record 9.6% in November from a year earlier, an indication of on-going inflation pressures

The Labor Department said Tuesday that its producer price index, which measures inflation before it reaches consumers, rose 0.8% in November after a 0.6% monthly gain in October. It was the highest monthly reading in four months.

Food prices, which had fallen 0.3% in October, jumped 1.2% in November. Energy prices rose 2.6% after a 5.3% percent rise October.

The 12-month increase in wholesale inflation set a new record, surpassing the old records for 12-month increases of 8.6% set in both September and October. The records on wholesale prices go back to 2010.

Core inflation at the wholesale level, which excludes volatile food and energy, rose 0.8% in November with core prices were up 9.5% over the past 12 months.

The increase in wholesale prices was widespread, led by a 1.2% increase in the cost of goods and a 0.7% rise in the price of services.

In the goods category, the price of iron and steel scrap rose 10.7% while the price for gasoline, jet fuel and industrial chemicals all moved higher. In the food category, the price of fresh fruits and vegetables rose while the price of chickens fell.

The surge in wholesale prices followed news Friday that consumer prices shot up 6.8% for the 12 months ending in November, the biggest increase in 39 years, as the price of energy, food and many other items shot up.

The Federal Reserve, holding its last meeting of the year this week, is expected to announce Wednesday that it will accelerate the pace at which it reduces its monthly bond purchases, preparing the way to begin raising its key benchmark interest rate, possibly by mid-2022 as it seeks to demonstrate its resolve to bring inflation under control."

MY COMMENT

In conjunction with the post above this one. Do you think that the FED ending bond purchases will have any impact on the cost of food....the cost of a car.....a chip....or anything. If they announce a raise in the interest rate of 0.25% four or five times in a year.......will that cause gas to go down.....food? the answer is pretty obvious......NO it will not. These are supply and data comparison issues. A year from now when the data is being compared to the numbers today....they will look good. No doubt many will claim that their policies did the trick. Of course.....the truth will not matter.

 

Days like this.......I just continue to ride the wave. I may not like the direction of the wave.....but I am still going to ride it. Over the long term that wave WILL get me where I want to go. Any other course of action as an investor......and.....I am just dead in the water.....and not going anywhere. It is all about.......long term MIND SET.

 

YES......it is ok to live in an alternate universe......just dont tell anyone else. I have spent much of my life in my own little universe......doing things that people say cant be done. Lots of successful people are doing the same thing. Find what works for you......and.....JUST DO IT.

WOW......."just do it".....that is a pretty neat slogan.....I should trademark that.

 

I think you are right Emmett. Many people.....apparently.....decided to retire during the lock down mess. I wonder how that will all work out for them over the coming decades. A huge social experiment. In fact the entire BABY BOOM retirement is going to be a HUGE social experiment since we are the first generation to retire with NO pension system. I guess we will find out over the next 10-20 years how well the 401K or IRA system works in REALITY.

When I say......"just do it".....you have to note that it is conditioned on finding what........works for you. If it does not work....than....JUST DONT DO IT. REALITY is a required condition.

 

Since the news is ALL INFLATION today....here is the latest info coming out on the OMI variation.

Data indicate omicron is milder, better at evading vaccines

https://apnews.com/article/coronavi...south-africa-c8d09bed79be4a25f752237c0470961b

(I have just posted the opening paragraph of the article......it sums it up. If you want more detail click on the link)

"JOHANNESBURG (AP) — The omicron variant appears to cause less severe disease than previous versions of the coronavirus, and the Pfizer vaccine seems to offer less defense against infection from it but still good protection from hospitalization, according to an analysis of data from South Africa, where the new variant is driving a surge in infections."

MY COMMENT

I find it interesting that.....apparently....these vaccines dont work very well.........or...... like prior vaccines. Are they even vaccines.....or are they simply therapeutics that treat severity? I dont know......but they are not in line with any other "vaccine" I have ever gotten. I am vaccinated including the booster and will continue to get updates as they are recommended. My vaccine of choice is MODERNA......I think the data for it is significantly better than Pfizer......but that is just personal opinion.

 

I see that th markets cme back some as the afternoon progressed. My LOSSES were much less by the close. AND....I even had.....ONE.....stock in the green....Nvidia. A true VICTORY today. I did, however, get beat by the SP500 by 0.39% today.

 

I must say....when it comes to inflation.....the current situation and the probable OVERREACTION by the FED looks to me like another in a long line of cases where the FED causes a recession. We have not seen any action by the FED yet.....so this is rank speculation.

But....we have a situation where inflation is being caused by supply issues and demand for unavailable products. AND...at the same time we have the potential for more and more early FED action. They are being EGGED ON by the financial media and others to........JUST DO SOMETHING.......quickly. A perfect....."potential".....situation for the FED to overreact and plop the economy into a recession.

For some reason most people seem to think.......that the FED actually knows what they are doing......and....it is their job to run the economy. NEITHER is true.

 

Where is RUDOLPH? We need that red nose to light the way for SANTA to get out of this MARKET FOG that we seem to be caught up in so far this week.

 

Speaking of MARKET FOG.

Stock market news live updates: S&P, Dow, and Nasdaq edge lower following red-hot inflation numbers

https://finance.yahoo.com/news/stock-market-news-live-updates-december-14-2021-232905142.html

(BOLD is my opinion OR what I consider important content)

"U.S. markets slumped on Tuesday following the release of a fresh economic report that affirmed red-hot inflation levels, sending tech stocks spiraling for the second trading session this week.

All three major indexes were down. The S&P 500 slid 34.67 points to 4,634.30, and the Dow dipped 105.26 points, falling -0.30% to 35,545.69. The tech-focused Nasdaq shed 175.64 points to 15,237.64

The Labor Department said wholesale prices soared by a record 9.6% in November from a year earlier, the fastest annual pace on record for the indicator and a sign inflation is likely to persist well into 2022.

With inflationary pressures on the rise, investors are bracing for a faster rollback of pandemic-era stimulus by the Federal Reserve, which commenced its two-day policy-setting meeting earlier today. The bank is expected to release its final monetary policy statement of 2021 with remarks from Federal Reserve Chair Jerome Powell Wednesday. An updated Summary of Economic Projections outlining individual members' outlooks for economic conditions and interest rates is set to accompany the statement.

Investors have anticipated a ramp up in the cessation of tapering as key figures point to more persistent levels of inflation but are weighing how aggressive the Fed may be in measures to curb it.

“We don’t believe he’s spooked, where he will have to move too fast,” People's United Advisors Executive vice president and chief investment officer John Traynor told Yahoo Finance live. “We’ll need to wait and see what kind of language comes out, but a quickening of the pace is certainly in the cards, and it’s certainly justified, but moving too fast and then moving too fast to raise rates would really upset the market.

GameStop (GME) and AMC (AMC) closed down nearly 14% and 15%, respectively following weekly declines for the meme-stock darlings.

Shares of Microsoft (MSFT) were down more than 3.38% at the end of the trading session, contributing to the Dow's losses. The software giant posted its biggest drop since last October, according to Bloomberg data, adding to yesterday's loss of nearly 1% at close.

Bank of America's monthly fund manager survey out Tuesday found investors are hoarding cash amid Omicron variant concerns and the threat of higher interest rates. The bank reported allocations to cash among investors jumped 14 percentage points in December from November. Fund managers were net 36% overweight cash, posting the highest exposure to the asset class since May 2020.

More economic data is set to come out of Washington this week. November retail sales, out on Wednesday, are expected to rise by 0.8%, according to Bloomberg consensus estimates. And November housing starts are forecasted to see a month-over-month increase of 3.3%.

Meanwhile, Morgan Stanley projects the U.S. unemployment rate will drop to 3% in 2022.

"It's stunning to see how much the rate has fallen in the last five months,” Morgan chief U.S. economist Michael Feroli told Yahoo Finance Live. “We expect that pace of decline to slow, but it doesn't take much to get below 4%, even with a tick up in the labor participation rate which has been depressed over the last year and a half."

12:05 p.m. ET: Microsoft posts biggest drop since 2020
Shares of Microsoft (MSFT) were down more than 4% in midday trading, contributing to the Dow's losses as the broader markets edged lower.

The software giant posted its biggest drop since last October, according to Bloomberg data, adding to yesterday's loss of nearly 1% at close.

Separately, J.P. Morgan released fresh research on Tuesday that said investors overlook Microsoft's leading position in data management. Data platform solutions contributed to about 12% of Microsoft's total revenue in 1H21, up from roughly 10% in 2017, according to the bank's note, which also said much of the company's growth is driven by cloud data platforms that grew from about 3% of total revenue to about 7% in the same time period. J.P. Morgan expects this to be a key source of upside heading into 2022.

Microsoft had a year of stunning numbers that made it Yahoo Finance's company of the year. The tech heavy weight passed a $2 trillion market capitalization in June and reported a $176 billion surge in revenue — a nearly 20% year-over-year increase.

11:01 a.m. ET: Meme-stock darling AMC extends decline
Shares of AMC Entertainment Holdings Inc. (AMC) were down 2.19%, trading at $22.73 a piece, though recouping some losses after falling as much as 11% at the open. The company was hit hard in Monday's sell-off along with other retail favorites, including Bed Bath & Beyond Inc. (BBY) and Tesla (TSLA).

The losses come as investors expect a rollback of pandemic-era stimulus by the Federal Reserve, putting risky assets and tech companies under pressure.

Retail investors comprise 20%-30% of trading volume, according to research from J.P. Morgan—a change from last year when these traders were seen as small-time market players."

MY COMMENT

Not exactly a rush for the exits today. More like a simple case of market and investor EXHAUSTION. The constant HARANGUING by government, and bureaucrats and the media is WEARING people out. Some of these people need to learn how to LEAD. Constant unrelenting NEGATIVITY and fear mongering is NOT how you do it.

The OMI variant story is a perfect example. MOST of the news on this has actually been POSITIVE. Yes it is spreading....perhaps faster.....but so far the data saying it is MILDER is holding. In the ENTIRE WORLD....there is ONE......a single....death attributed to it in England. And...who knows what other factors were involved in that one. YET....the tenner of the headlines and the news and the government people....has emphasized the negative......over and over and over. Pushing vaccines is one thing.....but they need to balance out the need for people.....after two years of this STUFF.....to hear a positive message once in a while.

 

Last FED day of 2021.....thank goodness. Same open as the last two days.......but.....not much matters till later when some of the FED stuff starts to come out. Here is s bit of economic data that is overshadowed by the FED stuff.....so....as usual no one will really care.

U.S. retail sales rise moderately amid shortages, high inflation

https://finance.yahoo.com/news/u-retail-sales-miss-expectations-134039042.html

(BOLD is my opinion OR what I consider important content)

"U.S. retail sales increased less than expected in November, likely payback after surging in the prior month as Americans started their holiday shopping early to avoid empty shelves.

A rotation in spending from goods back to services as well as shortages and the resulting higher prices also appear to have held back retail sales last month, with the report from the Commerce Department on Wednesday showing a sharp drop in receipts at electronics and appliance stores. Online retail sales were unchanged.

"This may be attributed to consumers doing holiday shopping earlier than usual because of the expected delays due to supply chain and inflation issues," said Marwan Forzley, chief executive officer at Veem, an online global payments platform.

Retail sales rose 0.3% last month. Data for October was revised higher to show retail sales surging 1.8% instead of 1.7% as previously reported. Sales have now risen for four straight months and increased 18.2% year-on-year. Economists polled by Reuters had forecast retail sales rising 0.8%. Estimates ranged from as low as being unchanged to as high as a 1.5% increase.

Several of the top U.S. retailers reported in mid-November that they had noticed an earlier start to holiday shopping.

Trillions of dollars in COVID-19 pandemic relief from governments across the globe fueled demand for goods, straining supply chains. The resulting shortages, ranging from motor vehicles to furniture and electronics, have raised goods prices.

Consumer prices increased a solid 0.8% in November, with the year-on-year gain of 6.8% the largest since June 1982.

MIXED BAG

The moderation in retail sales, which are mostly goods, reflected shortages. Receipts at auto dealerships dipped 0.1% after accelerating 1.7% in October. Automobiles remain scarce because of a global semiconductor shortage. Sales at electronics and appliance stores fell 4.6%.

But sales at service stations increased 1.7%, lifted by higher gasoline prices. Receipts at building material stores rose 0.7%. There were also increases in receipts at sporting goods, hobby, musical instrument and book stores.

Sales at clothing stores rose 0.5%. Receipts at restaurants and bars increased 1.0%. Restaurants and bars are the only services category in the retail sales report. These sales were up 37.4% from last November.

The modest retail sales gain likely does not change views that the economy is regaining steam after a slowdown in the third quarter that was triggered by the Delta variant of the coronavirus and rampant shortages.

The report was released as Federal Reserve officials prepared to wrap up a two-day policy meeting.

The U.S. central bank is expected to announce that it will speed up the tapering of its massive monthly bond purchases, against the backdrop of soaring inflation. An early interest rate increase next year is on the table.

Excluding automobiles, gasoline, building materials and food services, retail sales dipped 0.1% after accelerating 1.8% in October. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. More than half-way through the fourth quarter, consumer spending is above its third-quarter pace.

"Nevertheless, with disposable incomes now falling in real terms and the rapid spread of the Omicron variant likely to exert at least some drag on high-contact services activity, real consumption growth looks set for much slower growth over the months ahead," said Andrew Hunter, a senior economist at Capital Economics.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity rose at a 1.7% annualized rate in the third quarter. More than half-way through the fourth quarter, consumer spending is above its third-quarter pace.

Economic growth estimates are as high as an 8.7% rate. The economy grew at a 2.1% pace in the third quarter."

MY COMMENT

Not much here.....good or bad. We will have to wait till the Christmas shopping season is over after the first of the year to see how it all worked out. Looks like Consumer Spending is going well. A mixed report....just like everything in the economy right now. An indicator of the impact of closing down the economy.....especially the small business economy. People remain....totally up in the air.....as half the country if open and the other half is STILL closed or closing again.

 

YES......it is all about the FED.

Stock market news live updates: Stocks drift ahead of Fed decision

https://finance.yahoo.com/news/stock-market-news-live-updates-december-14-2021-233411115.html

(BOLD is my opinion OR what I consider important content)

"Stocks struggled for direction on Wednesday as investors looked ahead to the Federal Reserve's final monetary policy decision of 2021 and weighed the central bank's potential response to persistent inflationary pressures.

The S&P 500 were little changed The blue-chip index closed out Tuesday's session in the red for a second straight session, with technology stocks leading the way lower. The Nasdaq ended the session down by more than 1%.

All eyes on Wednesday will be on the Federal Reserve's monetary policy statement and press conference by Federal Reserve Chair Jerome Powell. Many market participants expect these will set the stage for the Fed to speed the withdrawal of its crisis-era stimulus programs, with the firming economic recovery and soaring inflation suggesting the central bank has room for a more hawkish tilt to policy. Last week's Consumer Price Index showed the fastest surge in U.S. consumer prices since 1982 on a year-over-year basis in November. And on Tuesday, the U.S. Producer Price Index jumped by the most on record at a 9.6% year-over-year increase for last month.

Specifically, many investors anticipate the Fed will ramp up the rate of tapering of its asset-purchasing program, which took place at a rate of $120 billion per month in combined Treasuries and agency mortgage-backed securities from the start of the pandemic through November. Last month, the Fed began dialing back these purchases by $15 billion, and announced another $15 billion reduction for December.

"We don't think that the Fed is really going to have any surprises for the markets [Wednesday]. They're probably going to announce that they're going to ... accelerate tapering, and that they'll probably finish that by March. But we think that they're going to leave themselves lots flexibility around raising interest rates," Tracie McMillion, Wells Fargo Investment Institute head of global asset allocation strategy, told Yahoo Finance Live on Tuesday. She added she expects just one interest rate hike from the Federal Reserve in the second half of next year.

Other pundits, however, expect an earlier liftoff on interest rates, which maybe be reflected in the Federal Open Market Committee's (FOMC) updated Summary of Economic Projections on Wednesday.

"The announcement of faster tapering after today's FOMC meeting is a done deal; we'd be astonished by anything other than a plan to complete asset purchases by the end of March at the latest," wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note on Tuesday. He expects the Fed to stick to its prior plan of purchasing $90 billion in its asset-purchase program this month, before doubling the rate of tapering from its current $15 billion per month starting in January.

"That would mean purchases drop to $60 billion in January, $30 billion in February, and zero in March, leaving the door open to a rate hike that month if the inflation outlook has not improved, via a clear and sustained increase in the labor force participation rate," he added.

A number of strategists noted the trading activity in recent sessions and weeks has reflected the market pricing of a more hawkish Fed. Software and other growth names were some of the biggest laggards in the major indexes during Tuesday's session.

"When you have an anticipation of higher interest rates, growth stocks or long-duration growth stocks certainly get hit the hardest," Art Hogan, national chief market strategist, told Yahoo Finance Live on Tuesday. "When you do that net present value calculation with a higher interest rate, that implied multiple or ascribed multiple to growth names comes in. So a lot of that's been priced in. When you think about some of those real growth-y names and momentum names and risk assets, they've seen a lot of carnage."

"What the market is trying to tell us here is that when you set your asset allocation plan for next year, you want to have a barbell approach with growth on one side — you want to have those growth names that are actually valued at a multiple to earnings, not a multiple to revenues or a multiple to cash flows or a multiple to sales," he added. "We anticipate 2022 is going to be very much like 2021, where you really want to have a balance between growth and value."

• 10-year Treasury (^TNX): +3.8 bps to yield 1.467%"

MY COMMENT

The FED will release their report at 2:00 Eastern time today and will begin their press conference at abut 2:30. Nothing before that time matters in the markets today.

 

REPETITION is the key to learning.....so here you go.

How to retire with $1M on a $50,000 salary
Here's how much of your salary you should set aside to invest for retirement.

https://www.foxbusiness.com/personal-finance/retire-money-savings-401k-investing-budget

(BOLD is my opinion OR what I consider important content)

"The old adage "you've got to spend money to make money" is largely true, but it generally refers to business owners or companies spending money to scale up their businesses. For the average American who doesn't own a business and works a regular job (or two), the more appropriate saying might be "you've got to invest money to make money."

At the end of 2020, the average salary for a full-time American worker was about $51,000. Would that be enough income to retire with over $1 million? It's definitely possible -- here's how.

Your 401(k) alone could get you there

Time is your friend when it comes to investing, so the longer you have to invest, the larger your retirement nest egg will grow. But even if you are in your 30s and haven't saved a dime, you can still accumulate over $1 million by the time you draw that first Social Security check.

The key to doing that is to set aside about 20% of your salary to save and invest for future expenses, like retirement. To do that, you need a budget so you're covering essential expenses -- housing, cars/transportation, child care, food, utilities, healthcare, gas, etc. -- as well as discretionary expenses, such as eating out, entertainment, and travel.

Let's say you make $50,000 per year. If you set aside 20% for savings and investing, that comes out to $10,000 per year, or roughly $833 per month. A big chunk of that should be allocated to an employer-sponsored plan. If you contributed 6% of your annual salary to the plan, that comes out to about $3,000 per year, or $250 per month.

Your employer-sponsored plan, or 401(k), alone could pretty much get you to that $1 million goal by retirement. If you go online, you'll find there are numerous 401(k) calculators to help you do the math. I found one where I input a 6% contribution based on a $50,000 annual salary, with a 50% employer match up to 4%. I included a 3% annual raise over a 30-year time horizon, with retirement at age 65. I also assumed a 10% annual return on investment, which is about the long-term average of the S&P 500.

That came out to $904,000 after 30 years. But if it was only over 20 years, the total with the same inputs was roughly $296,000, so it really shows the importance of starting as early as possible.

Additional investments in stocks or ETFs could pad your nest egg

If you could save and invest 20% of your salary, you'd still have almost $600 more per month to save and invest after contributing to your employer-sponsored plan. With that roughly $600, you could put, say, half of it in a savings account and invest the other half in the stock market, giving you an additional $300 per month to invest.

Maybe you take half -- $150 per month -- and invest it for your kids' future college tuition or wedding. The other $150 per month could be invested to pad your retirement next egg. Let's say you took $5,000 from your savings and invested in a portfolio of stocks or exchange-traded funds (ETFs).

And let's assume the investments average a 10% annual return. If you invested $150 per month in that portfolio, with a 10% return, you'd have about $438,000 after 30 years. The combination of your employer-sponsored plan and this portfolio would amount to over $1.3 million after 30 years.

Now, let's say setting aside 20% for savings and investing is unrealistic, and you only had $100 per month to invest in a few stocks or ETFs. That $5,000 investment, with a 10% annual return, would jump to $325,000 after 30 years.

As this hypothetical shows, it is definitely possible to amass more than $1 million for retirement on a salary of $50,000 per year. The key is starting early, investing in your employer-sponsored plan, and developing a budget that prioritizes saving and investing.""

MY COMMENT

The key thing in doing this is....taking the first step and starting NOW. We are coming to a new year. It is the perfect time to start saving and investing for YOUR future.

The sooner you start........the sooner you will hit your goals.

The second requirement is doing this over the long term......year in and year out for the rest of your life. DISCIPLINE and strong perseverance are required. At first the money will be small and getting to that goal will seem impossible. BUT....over time....bit by bit......the balances will grow and will eventually hit that first milestone....$100,000. After that the milestones will come faster and faster as your account snowballs and compounds.

So......start at the earliest age possible......stick to the plan and increase the amount you are investing as your pay goes up....and....you will be AMAZED where you end up in 30 years.

 

A POSITIVE word for investors.

We have just TWO weeks left in the investing year after this week. At this moment today.......after this past couple of days of down market.......we are at +23.05% year to date for the SP500.

I assume that MOST investors are doing very nicely this year....whether they are equal to that SP500 gain or not. It has been an AMAZING run up this year. If you are at least EQUAL to that SP500 gain....YOU....are over DOUBLE the average annual return for the index.....this year.

As investors we tend to take this stuff for granted. I know that I do. BUT......a gain of nearly 25% in one year......INCREDIBLE. SO....balance the past couple of days against the ENTIRE YEAR. That gain of +23.05% in the SP500 represents the ENTIRE YEAR.

SCREW the past couple of days.....SCREW today.....CELEBRATE the gain that has been racked up by anyone invested in the SP500 Index for the past year. While you are at it.....CELEBRATE the gains that have been racked up by anyone invested in the SP500 over the past couple of years........+41.10%.