There is certainly no shortage of advice on how to invest for a successful retirement. However, sometimes it can be difficult to know who to believe. If you don’t have a trusted fiduciary financial advisor, the next best place to get advice is from those who have become multimillionaires themselves.
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Popular financial icons like Warren Buffett, Suze Orman, and Jim Cramer have all been successful in making and investing money, so it’s worth listening to the advice they give to investors in general. Here are some tips for a successful retirement from some of the best-known financial experts.
Last updated: April 22, 2021
Buy index funds
Warren Buffett, the legendary “Oracle of Omaha,” has given decades of investment advice to anyone who would listen. One of his most important tips for investors in general, however, was to simply buy index funds. Buffett has always had little faith in the ability of active fund managers to outperform the S&P 500 Index, so he even asked his trustee to invest 90% of his estate in index funds after his death. This general advice he also considers appropriate for most investors.
See: 11 Ways Warren Buffett Lives Frugally
Switch to a Roth account
In a mid-June 2020 interview on the Pivot podcast, financial commentator Suze Orman pleaded with investors to use Roth accounts for their retirement savings. As Orman said, “Please, if you have the option of doing a Roth 401 (k), 403 (b), or a TSP, or a Roth IRA, these are the types of retirement accounts. where you want to be. Stay away from the traditional… where you get a tax write-off today, but in the long run, when you go to take your money out, you’ll have to pay taxes on it. Orman added, “With a Roth, you pay taxes today, and in the long run, when you take it out, it’s tax free.”
Check Out: Top 26 Tips From Suze Orman That Will Save You From Financial Catastrophe
Avoid credit card debt
How Can Avoiding Credit Card Debt Prepare You For Retirement? By freeing up funds that you can use for savings and investing. According to Mark Cuban, “accumulating credit card debt is the worst investment you can make.” Any amount you owe in interest on your credit card is just wasted money that could have been used to fund your retirement accounts instead. If you have a $ 10,000 balance on a credit card with the national average interest rate of 14.75% on a credit card, for example, you’re paying $ 1,475 a year in interest that could instead be used for invest for retirement.
More: 20 Awesome Things Mark Cuban Says To Do With Your Money
Saving for retirement should be consistent and uncomplicated
Financial personality Dave Ramsey is a firm believer in simplicity when it comes to saving for retirement. According to Ramsey, investing consistently than finding a mysterious “get-rich-quick” system is far more important to meeting your retirement goals. Ramsey recommends investing only when you’re financially ready and never investing in something you don’t understand. As part of Ramsey’s Retirement Savings Plan, the best way to achieve your goals is to set aside 15% or more in Roth IRAs and pre-tax retirement accounts. To meet your retirement savings goals, Ramsey recommends investing in growth stock mutual funds with at least five years of consistent returns.
Read: Financial Advice Experts Would Give Their Younger Me
Understand the difference between investing and speculating
Kevin O’Leary, known as “Mr. Wonderful” in the popular “Shark Tank” series, has no problem with people who enjoy day trading. However, if you’re looking to retire successfully, O’Leary stresses that you need to put in place a long-term investment plan first. As quoted in The Penny Hoarder, O’Leary says, “My style is to put money aside for my whole life and keep it invested.” Once you have enough reserves for a financial base, you can use whatever extra money you want, including day trading.
See: ‘Shark Tank’ Stars Share 50 Business Tips
Wait to buy individual stocks
Jim Cramer, the former love-or-hate-hedge fund manager who hosts CNBC’s “Mad Money”, is an equities trader by nature. However, for those saving for retirement, Cramer says invest in index funds first. According to Cramer, the first $ 10,000 you set aside for your retirement savings should go into index funds to form a core portfolio. Once you’ve got that basic investment in place, Cramer says, you can start choosing individual stocks for your retirement portfolio.
Find Out: 25 Money Experts Share The Best Way To Invest $ 1,000
Buy assets that pay off your responsibilities
Robert Kiyosaki, author of the famous “Rich Dad” series, suggests that most people save for retirement the wrong way. According to Kiyosaki, rather than using traditional savings methods like IRAs and 401 (k) plans, investors should buy assets that generate cash flow and pay off their liabilities. Kiyosaki says he and his wife “invest in assets that [generate] cash flow like real estate, oil wells, business and more. Every month, money flows into our accounts from these investments, covering our expenses. Kiyosaki refers to this as “printing money”, finding ways to generate enough cash to cover all of her needs.
Read: ‘Rich Dad Poor Dad’ Author Robert Kiyosaki: You should never say ‘I can’t afford it’
Get your financial structure in order before you invest
Suze Orman loves investing in Roth accounts for retirement, but for young investors, she points out that there is an even more important first step. Before you invest at all, according to Orman, you need to get rid of high-rate consumer debt, like credit cards and personal loans, and you need to build up an eight-month emergency fund. As reported to NextAdvisor, in partnership with Time Magazine, Orman suggests that after getting your financial house in order, “I would be on average in dollars each month with a specific amount of money in the ETF with the symbol VTI. And do it at a discount brokerage firm where there is no commission. VTI is the symbol of the Vanguard Total Stock Market Index, which includes stocks from across the market.
Read: How To Become A Millionaire: Find Out The Best Ways
Stay the course
Warren Buffett is so full of investment wisdom that every spot on this list could be taken by his recommendations. However, two of its most important are the ones listed earlier – buying index funds – and this one – staying the course. As Buffett noted in his 2018 letter to shareholders, “While the markets are generally rational, sometimes they do crazy things. According to Buffett, investors need “an ability both to ignore the fears or excitement of the crowd and to focus on a few simple fundamentals.” In other words, invest for the long term and not get too caught up in the daily emotions of the stock market.
See: 21 Warren Buffett’s Life Tips Anyone Can Use
Speculate in your youth, choose more conservative stocks as you get older
As noted above, Jim Cramer recommends that investors look to index funds before picking up individual stocks in a retirement account. However, when the time comes, Cramer also has specific recommendations on what types of stocks you should own, and it depends on your age. “The younger you are, the more I beg you to take an aggressive stance on something speculative,” Cramer told CNBC. For more experienced investors, “I think you need to try a stock like Johnson & Johnson, a company with a long history of paying dividends.”
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This article originally appeared on GOBankingRates.com: Suze Orman, Warren Buffett and other money experts take a look at the best way to prepare for retirement