Contrary to popular belief, retiring by age 40 is a possibility. The catch is, you must make some extreme sacrifices to do so.
Extraordinary determination coupled with ambition and a little bit of luck will put you on the path to early retirement. Many will read these steps and find motivation to accomplish this hefty feat while others will read them and think, “It’s not worth it.” Ultimately the way you choose to handle your money is up to you.
We’ve found three ways to work toward early retirement:
1. Don’t Spend Too Much
Okay, so this may seem like a steep requirement, but it’s necessary. Of course you have to pay bills and necessary things like that. This step is in reference to vacations, dinners and shopping sprees. Many people do not want to live like they are on the cusp of bankruptcy but conserving money early on in your life and career can better prepare you for the future. This can even be applied to where you live. Find a city with a low cost of living or maybe an apartment that is smaller than ideal. The money you save on rent will add up for your future.
2. Bring in the Big Bucks
Clearly, everyone wants to make as much money as possible, but not everyone goes after — and achieves — those goals. You need to earn a lot of money quickly. Be an aggressive employee and look for opportunities to take on more work and take jobs that will give you room to grow as an asset. Be respectful, be focused but don’t be pushy. By making a lot of money early on in your career you can open a high-yield savings account. The way you make money off these accounts is all about your account balance (how much you save). Of course it’s easier to save more when you earn more. Take a look at these savings rates to find the best account for you.
3. Make Smart Investments
This is the trickiest item on the list. A high-yield savings account is a great way to watch your money grow, but you will not necessarily make enough to retire on. This step is similar to number one in the sense that if everyone knew the best investment to make they would be making it, and the weak economy is definitely not helping the situation. Try and find high dividend stocks that beat the market consistently. This step can require high-risk money management and a lot of luck.
Ten years ago the stock market was the way to go. Consumers who had extra money were highly encouraged to invest. Now, investing in stocks does not necessarily bring in the kind of return that it used to. That being said, investing your money is the only way you can watch it grow to what you need to retire at an early age. If you have a gut feeling or the money to buy bonds from a successful, growing corporation and can afford to take a hit in your retirement savings, go for it.