Looking for a retirement investing strategy that works best for you? Be inspired by the story of this retiree who did it successfully!
In this article:
- A Little Extra Income Goes a Long Way
- The Value of Extra Income and Smart Investments
- Adding Turbo Power to Your Retirement
Retirement Investing Strategy for a Wealthier Life
A Little Extra Income Goes a Long Way
This weekend on a flight back to Baltimore, I met Joe. Joe is a soft-spoken, middle-aged gentleman who is enjoying the opportunity to travel now that he is retired.
As we bounced through some turbulence over the east coast, Joe told me his unusual retirement strategy story.
Times were different back then. You could work as many hours as you wanted and no one thought it was strange to work overtime.
I could see the pride in Joe’s eyes. Even as a young man, he had always been a hard-working person.
Joe was content to earn an honest wage for an honest day’s work. As I listened, I couldn’t help but wish my kids had been there to learn from his investing for retirement story.
At that time, Domino’s had a program where employees could buy stock through the company without paying commissions or fees. So with every paycheck I got, I set a little aside to buy a few shares of Domino’s Pizza (DPZ). And then I waited patiently. Eventually, those shares became worth $400,000 and I sold them recently when I retired.
Hard work and patience will eventually lead to success in so many areas of life, including long-term investing.
Today, thanks to the wise moves in investment management he made as a kid, Joe has an extra $400,000 to add to his company retirement plan and his Social Security payments. That extra money is the result of a retirement investing strategy that he effectively used, so Joe can enjoy traveling now that he’s retired.
I smiled as Joe told me about the “fancy Wall Street suits” who came knocking at his door once the value of his Domino’s stock hit $100,000.
They tried to tell me to sell my shares and buy into some of their funds. But I knew Domino’s was a solid company and I was enjoying watching my shares move steadily higher. So I told them to take a hike!
That decision to start investing paid off very well for Joe, allowing him to grow his wealth much more quickly than he would have if he paid the fees and expenses that the big Wall Street firms would have charged him. Talk about a good old-fashioned American success story!
When we got off the plane, I shook Joe’s hand and wished him well. He certainly deserves a happy and prosperous retirement because he has a great risk tolerance.
Today, I still find myself thinking about Joe’s retirement investment situation and how a few smart moves and retirement investing strategies have set him up to retire in style.
The Value of Extra Income and Smart Investments
When you break the retirement investing strategy down, Joe’s extra wealth came from two key sources.
First, he found a way to make a little extra income. For him, that meant spending a few extra hours delivering pizza when he was a young adult.
For you and me, it may mean setting a bit aside from our paycheck, finding an enjoyable hobby that pays us a little extra or even picking up a part-time job on the weekends.
Second, Joe took that extra income and invested it wisely. For him, that meant buying shares of a company he knew well — Domino’s Pizza.
My favorite way to invest for retirement is to buy blue-chip stocks that pay attractive dividends. (I’ll tell you what to do with those dividends in just a minute.) Some of my favorite blue-chip dividend stocks include Apple Inc. (AAPL), Walmart Inc. (WMT), and General Motors (GM).
These individual stocks are backed by solid businesses that continue to grow profits. They pay attractive dividends quarter after quarter.
As they grow over the years, the dividend you receive from your shares will only grow larger while the stock’s underlying value should also increase.
So, if you own these stocks during your retirement, you’ll be able to use the dividend payments to help fund your day-to-day expenses. At the same time, your wealth will grow as the value of your stock positions continue to increase.
That’s a smart way to consistently pull cash out of the market while still exercising the patience that will lead to more wealth over time.
Adding Turbo Power to Your Retirement
While Joe was extremely successful in building extra retirement wealth using his retirement investing strategy, there’s one additional tool he could have used to add even more wealth. Perhaps, if he had used this strategy, he could have retired with an extra $600,000 or $800,000 to his name.
Dividend reinvestment programs can make a huge difference in how fast your blue-chip dividend stock wealth grows.
Here’s how these programs work.
When the companies you’re invested in pay their dividends, you can opt to have that cash automatically invested in new shares of cash. So, if you started with 100 shares of Walmart, you could receive an extra share or two each quarter.
Every time you add an extra share to your position, the next dividend check will be a bit larger because you have more shares paying you a quarterly dividend.
The longer you reinvest your dividend payments, the more shares you’ll own. Over time, you could have two or even three times your original number of shares.
That means each quarter, you’ll receive even more wealth from your dividend payments, and as the stock price moves higher, your wealth will grow even more quickly (because you’ll own more shares).
This type of retirement investing strategy requires a bit more patience because you’ll have to wait longer to receive cash from each of your dividends. But, if you can afford to defer the cash payments you receive from your shares and other investment accounts, you’ll wind up making a lot more money over time with investing after retirement strategy.
So, there you have it — the Domino’s Pizza retirement secret that handed Joe a cool $400,000 and could give you even more through the course of your retirement.
I encourage you to put the retirement investing strategy to work with your own wealth by buying shares of some of my favorite blue-chip dividend stocks as your investment options.
That way, you have more cash to spend during your golden years, and you’ll be able to provide investment advice to a new generation of retirees who can learn from your experience.
If you still don’t have much confidence to decide on which is the best retirement strategy, you can consult an investment adviser for guidance in your investment portfolio.
What retirement investing strategy can you recommend to us? What are your retirement goals? Share your thoughts in the comments section below!
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