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My favorite definition of retirement is “to be
able to do whatever I want to do at whenever I want to do and still maintain
a good lifestyle financially.” My retirement plan is geared toward that
goal.
I originally planned to work hard for money,
live frugally and contribute as much as I can in my 401K plan hoping my
plan will have enough money for me to retire comfortably. I gradually
found some faults in that plan to meet my retirement goal. First of all,
I only have limited time and strength, physically and mentally, to work.
Those “assets” will surely diminish as I get older. I won’t be able to
compete with young and energetic college students freshly graduate from
schools with update technology. After many down sizing and layoff, I have
serious doubt about job security. I know I have to do something to create
my own financial security. Secondly, when I see how volatile the stock
market is, I know there is no guarantee the stock market will be in my
favor when I retire. By relying solely on my 401K to retire, I need the
mercy of the stock market for my retirement. The 401K plan is, after all,
a one-dimension investment vehicle. If the market hiccups, my plan will
be severely affected. I will undoubtedly have difficult time to have ends
meet, not to mention “to be able to do whatever I want to do at whenever
I want to do and still maintain a good lifestyle financially.”
My revised plan is to increase my portfolio and
passive income when I can at this relatively young age so those assets
will be my main sources of income when I retire. Right now, I am working
hard in creating my portfolio income by trading the market the way I
learned. I am still working for a trading system that consistently beats
the market regardless of it going up, down or sideway. 2005 was my
learning year, 2006 was my practicing year and 2007 was my testing year.
I plan to improve my trading skill and raise my trading level each and
every year. I understand it can’t be done overnight. At this pace, I have
confidence I will achieve my trading objective in the near future.
I also plan to create my passive income by
forming my own investment company and investing in real estate. If I
consistently beat the major indices, I should have no problem finding
customers who are serious about their investment result but have no idea
how to do it. I recently did a survey and found some interesting points:
The majorities are still trapped by the myth they can only make money in
an up market. People are happy with an annual return ranging from 10% to
25%. Some even say as long as it is better than what the bank gives them,
they will take it. The return is reasonable and I believe I can do it
consistently in a few years with my increased trading knowledge and
experience. Investing in real estate is another way to create my passive
income. I anticipate some problems with real estate investment due to my
relatively new experience and knowledge about real estate market.
However, I believe tax advantage of real estate investment will likely
out weight those potential problems.
I plan my retirement as if there is no social
security left when I retire. If social security is there, I will take it
as extra income. If it is not there, I still have something to rely on
for the rest of my retirement. My portfolio and passive incomes should
allow me “to be able to do whatever I want to do at whenever I want to do
and still maintain a good lifestyle financially.”
To plan or not to plan? The choice is mine and I choose to plan
for a better financial future.
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