Yesterday’s LA Times had an interesting piece about boomers day-trading their retirement accounts in an attempt to beef-up their nest eggs in advance of retirement. Here’s the money quote:
“”A lot more frequent trading is happening,” said Chad Carlson, a financial planner based outside of Chicago. “People are saying, ‘I’m that much closer to retirement so I have to do something.'”
If your plan for retirement is to suddenly become so great at trading stock that you can beat the market, you have some major problems.
Sadly, I can’t help someone nearing retirement age with no assets. But I can help younger people who are looking to avoid being in that position.
Here’s what to do:
- Instead of buying a big house (a 30 year liability), buy an apartment building for a reasonable price using reasonable leverage
- Live in it for a while and save money
- Buy another one, move out of the first one and into the second one
- Rent out the unit you used to live in; now the first building is cashflowing to you every month
- Rinse, repeat, as many times as you can stand it
Do you know what your finances look like at 60 if you do this a few times in your 20s and 30s? Your assets are worth a few million bucks. You have a strong stream of passive income coming in from your portfolio of buildings. You don’t have anything to worry about in retirement.
The only limits on how rich the above strategy can make you are how quickly you get started and how quickly you can save up additional down-payments to accelerate your acquisition strategy.