There are many steps and strategies to implementing a successful investment plan, but Ulin suggests three steps.
“The first step is to assess how much you will need to retire for your long-term goals,” Ulin says. “The most basic calculation is that you will need at least 15 times your last few years of expected salary to retire successfully. For example, someone earning $100,000 per year will need to shoot for a $1.5 million nest egg.”
The second step is to figure out how much you should be saving from each paycheck to hit your retirement goal in addition to an expected growth rate of your savings.
Step three is to figure out how much investing risk you can tolerate. This will help you determine whether to diversify your investment portfolio more toward riskier stocks or safer bonds.
According to Ulin, you will need to create an investment policy statement that details your investment strategy, your risk tolerance and how much you want or need to earn in return.
“If people in their 40s are not retiring for 20-plus years, they may be more willing to take on a high level of risk,” Ulin says.
Use the rule of 72
Don’t just follow formulas