Long Term Savings
This section of your finances is the big show. This is money that can sit for 10 years or more. This money actually has the chance of doubling.
Anything your employer offers (401K or basic pension) is great. I definitely would do that full throttle from the day I start working. But, you should also manage a little bit of your own because if you pay attention you can many times come away with more than your fund could every get you.
Now my thoughts on Long Term Savings are not radical and you won’t be buying your own island with the proceeds. What my strategy lacks in sexiness it more than makes up for in piece of mind. Over the last 6 years, I have gained a minimum of 19% using it and a maximum return of 34%.
It’s pretty simple:
- Buy shares in an S&P 500 Index Fund. Vanguard is the common face and has been return mid-teens for years.
- Pick 4 key blue chip stocks each dominant in their sector. Pick sectors that have a huge need in the future and are not going any where soon. Check into the companies and make sure that they have a good amount of cash and well spread out in their business model.
You really can’t go wrong with that. When I’m feeling agressive, I’ll put 80% in the stocks and 20% in the Index. When I’m feeling like we’re going to take a hit, I reverse it.
Also as I get older, closer to when I need to begin cashing it out, I plan to move to mostly Index funds.