Early Retirement Strategy - Save, Invest and Repeat Often

In October, 2007, I took early retirement to join my wife who had stopped working eight years earlier. The strategy that helped us achieve early retirement was basically three parts:

1. Save 10 to 20% of our income. This created a sustainable mentality and habit of saving. In addition, it helped us to consistently live below our means since we only used 80 to 90% of our take home pay. Finally, saving kept us from going into debt, other than a home mortgage, which we paid off recently.



2. Invest. Since my company retirement savings was aggressively invested, i.e. only in our company stock, we invested our own funds very conservatively. In our own accounts, we put about 70 to 80% in CDs, bonds, and other fixed income and the rest in individual stocks and ETFs.



3. Repeat often. We would save and invest consistently with every paycheck. In addition, we tried to put most, if not all, of raises, bonuses and other adjustments into savings if possible. This helped us avoid lifestyle creep, which could happen easily in the former times of larger raises and bonuses.

For us, each element of the strategy was like the leg of a stool, without one the overall goal for early retirement might not have been achieved. Some may question the investing element, especially with the significant declines in the stock market and real estate. However, in spite of the poor returns in the past 18 months, I still believe that a good investment strategy is still relevant for the future.

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This is not financial, saving or retirement advice. Please consult a professional advisor.

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