Sign up for free Cabot Wealth Advisory e-newsletter
Stocks for Retirement
So let's just suppose that you actually want to retire at some point in the future. If you're like most people, you're probably a little behind in funding that retirement—especially after the wealth-gutting market of the last year—and you're wondering if you can catch up.It's important to know how this happened to so many people, and the answers are actually pretty simple. Most people in their twenties don't save; they're hormone-addled crazies who can spend half a decade or more just celebrating not being in school any more. (Yes, I miss those days!) There are bars and clubs to visit, clothes, electronics and cars to buy, apartments to furnish, maybe some travel and probably a wedding. Even if there weren't those college loans to pay off, there wouldn't be much excess income to be salted away.
In their thirties, people want to move out of that apartment into a house, which means a mortgage and more furniture. The relentless ticking of the biological clock usually militates the addition of small humans to the household of our rapidly maturing non-investors. Small people don't actually eat all that much, but their other needs are pricey and absolute. Any excess funds that the house doesn't eat will likely flow in Junior's direction. There is probably some investing going on in the form of an employer-matched 401(k) or an IRA and a college-directed 529 plan, but that's about it.
The fascinating forties find most people with a growing income that is more than matched by the requirements of a growing family. A move to a bigger house, family vacations and the beginning crunch of college costs keep the lid on any investing that isn't part of the work/match program.
By the time people reach their fifties, their costs are finally coming under control as earning power peaks, children graduate from college and expensive weddings are planned and survived. But just as people see the light at the end of the financial tunnel, they also see the freight train of retirement coming right at them. And it's a lot closer than they ever thought it would be.
All of us editors at Cabot get lots of inquiries from people who need to play catch-up with their retirement funds, and wonder if such a thing is possible.
Our response is that we give advice about investing in stocks, not in retirement planning or portfolio management. At the same time, we clearly believe that investors who are willing to invest the time, energy and (of course) money in a disciplined and systematic way can indeed make AND KEEP big money over time.
I work on the growth side of Cabot, writing the Cabot China & Emerging Markets Report. I have a lot of confidence in the ability of Cabot's growth stock disciplines to produce market-beating results. Partly this is because we have a system for selecting growth stocks that makes sense. But mostly, it's because the Cabot system of market timing requires us to exit the market and go to cash when the market is in a confirmed downtrend.
So, do you have the capital to invest, the discipline to follow the rules and a source of good advice to point you toward strong growth stocks at good technical buy points? If you do, you stand a good chance of being able to help yourself make up some ground on your retirement. Whether it will be enough to put you onto that 78-foot sailboat cruising the Caribbean is another matter.
At the very least, becoming an active growth investor and buying stocks for retirement will get you off your financial duff, which is what your mutual fund managers have had you sitting on since the 20th century. The mutual fund industry has done a wonderful job of selling the notion that you can't time the market and that the only sensible strategy is to shovel money into your 401(k) and keep shoveling no matter what the market is doing or what the results are. Just keep shoveling, they say, and eventually the historical uptrend in the market will catch up with you and lift your little boat out of the mud.
The passive mindset engendered by that kind of self-serving advice makes investors vulnerable to the kind of bear-market damage that the 2008-09 slump inflicted. And it keeps investors from riding the bull market that follows.
If you've actually been investing since you were in your twenties, congratulations! You probably have a big enough account balance to actually retire, and even the Big Bull of 2008 didn't sink you.
For those who kept putting off investing until you could count the years until retirement on both hands, I say it's time to get active and buy some stocks for your retirement.
Each write-up features commentary on the picks from one or more of our expert stock market analysts, as well as company details and a stock chart.
Investing in Growth Stocks can be like looking for a needle in a haystack, but the triple-digit returns make it all worthwhile.