Which Investment Strategy Can Help You Retire Earlier? Let’s Weigh The Pros And Cons.

When it comes to investing for retirement, there are many options available. Each has its benefits and risks, and choosing the right one depends a lot on factors such as how old you are now, when you hope to retire, and how much you’d like to have after you do.

And for those of you who want to undercut the typical retirement age of 65 by a few years (or decades), it’s crucial to identify a strategy that offers enough reward without too much risk.

Here’s a brief breakdown of six leading investments and how they might — or might not — be right for your early retirement plan:

• The standard: We’ll start with the good old regular investment account, which might not present the same growth rate as other options but does present some tax advantages.
• Roth IRA: This popular strategy lets investors withdraw their contributions without taxes or penalties, though you won’t be able to touch earnings until the age of 59 and a half.
• Stock index fund: By locking investments into a particular index, that money is diversified among respected companies, often leading to reliable, if not massive, gains over time.
• Municipal bond: Since the gains from this strategy aren’t particularly high, it’s better suited for higher earners with diversified investments who just want a safe, tax-free place to park money.
• Rental property: This has been seen as a relatively safe haven for generations and can provide lots of upside — profits, income, tax benefits, etc. — but can require significant upkeep.
• High-yield savings: You might not think of a savings account as a retirement strategy, but high-yield options can give you bigger returns than you might think to help fund your retirement.

There’s no perfect strategy, but with a little research you can find the one that’s best for you.

Chris Agee November 18th, 2024

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