So if you’re looking for ways to accelerate your retirement, here’s how you can move the date of your retirement party up a few years:

1. Add cash.
Yes, it takes money to make money. So the first step in starting and growing your retirement nest egg is finding ways to get more cash into your retirement accounts.

When times are tight, saving more can be a tall order. But you may get some help. If your employer offers a matching contribution to your 401(k) plan, you might double those extra savings. Similarly, Uncle Sam offers benefits in the form of deductions for contributions to 401(k) plans and traditional IRAs, as well as tax credits for low- and middle-income taxpayers who contribute to IRAs.

It takes a little more than $550 per month in savings, earning a 7% return, to get to $1 million over the course of a 35-year career. But if you can add just $100 per month to that — including what your employer puts in and your tax savings — you can cut more than two years off your wait.

2. Embrace stocks.
Saving more is great, but there’s only so much you’ll be able to put aside. You have to make the most of what you have.

People are often too conservative in their retirement investments. Despite the sometimes violent ups and downs of the stock market, the long-term return on stocks far exceeds that of less risky investments like bonds and bank savings accounts. If you have all your money in cash, you won’t lose a penny — but you’re lucky to make 1%-2% right now. Even target funds and other balanced retirement options have sizable portions of their assets in bonds.

A 7% return is a reasonable average for a portfolio that has slightly more in bonds than in stocks. But throughout most of your career, you can afford to take more risk. Owning more stock could raise that return to 9%, lopping off almost five more years from your target.

3. Hit for the fences.
If you only want to match the S&P 500, buying index funds is easy. To get higher returns, however, you’ll have to find stocks that will outperform the index. Here are some examples from the past 20 years:

Those stocks have done particularly well, especially given how badly stocks have done since 2000. But you don’t have to belt all your picks out of the park to retire sooner. If you can eke out just another couple of percentage points on your average return — boosting it to 11% — then that’ll cut another 3 1/2 years off your target.

4. Become a cheapskate.
So far, we’ve only looked at half of the story. How much you spend plays just as important a role in retirement as how much you save. And while many expenses go away when you stop working, new ones quickly take their place — things like travel, entertainment, hobbies, and medical care.

But you have a lot of control over many of these expenses. If it’s worth it to you to spend less in retirement, you won’t have to save as much before you retire. Cutting 10% off your spending means you’ll get to your smaller goal a year earlier.

All in all, combining these four simple tips can let you retire as much as a decade or more sooner than you otherwise would. That thought just might be enough to make even a bad day at work seem brighter.

Source: Fool.com

Investing Lessons from the Poker Table

I hate to disappoint, but I’m not going to stick my neck in the middle of that debate.

But whether we agree that investing and gambling are similar, there are some general ideas from the game of poker that can be adapted quite well for investing. And, heck, if there’s the possibility that it’ll make you a better investor, is it worth fretting about the source?

Lesson 1: You don’t have to play every hand
One of the quickest ways to make your chip stack disappear in poker is to blindly play every hand dealt to you. In a 10-player Texas Hold ‘em game, you’re only forced to bet 20% of the time, and even then they’re only small bets. You can throw away every other hand that’s dealt to you if you want, and it won’t cost you a dime.

But why would you throw away any cards? Well, a two of diamonds and a six of clubs can theoretically become a full house, but you start out with the odds stacked heavily against you when you play a hand like that. Waiting for something like a pair of kings or a queen and jack of spades gives you a much better chance of seeing a return on the money that you’re wagering.

The same holds true for investing. There’s a possibility that CIT Group (NYSE: CIT) could magically avoid bankruptcy and return a bonanza for shareholders. Or Sirius XM Radio (Nasdaq: SIRI) could finally prove the critics wrong, start posting huge profits, and watch its stock fly. But let’s face it, both are long shots, and if you’re looking for solid, predictable returns to build a retirement nest egg, throwing piles of money at either stock is probably not the best idea.

On the flip side, companies like Pfizer (NYSE: PFE) and Honeywell (NYSE: HON) positively ooze predictability and solid returns over the long run. Investing in companies like these — assuming you’re paying a fair price — simply gives shareholders a much higher probability of seeing returns from their investment. And, heck, investors don’t even have to wait for rewards since both currently pay dividends that exceed the yield on 10-year U.S. Treasuries.

Lesson 2: Play your cards right
Kenny Rogers immortalized yet another lesson that we can take from poker when he sang: “You got to know when to hold ‘em / know when to fold ‘em / know when to walk away / and know when to run.”

In both poker and investing, you’re faced with continually changing information. The best poker players and investors are those who not only make the most accurate analysis of the available information, but use that analysis to drive good decision making, whether that’s — in investing — buying, selling, or just sitting tight.

IBM (NYSE: IBM) is a great example of the constantly changing tides that investors can take advantage of. The company had one of the truly great growth stocks in its early years and delivered impressive gains. But not all that long ago it faced some major challenges as the PC market commoditized and its bread-and-butter mainframe market turned into a sleepy niche.

More recently, IBM has found a new life in transitioning to offering higher-margin software and services. Just like recognizing when you have a possible straight flush developing and betting accordingly, investors who figured out what was going on at IBM and invested accordingly have been handsomely rewarded. Over the past five years, its stock has substantially outperformed the S&P index.

Lesson 3: Be choosy with your “all-in” moments
It’s certainly exciting to watch a poker pro push all of his chips into the middle of the table and call “all in.” But it’s important to remember that top-notch players have run through a bunch of mental math to determine that the odds are heavily in their favor when they make a call like that.

Having all of your money invested at all times can be one of the easiest ways to go about investing, but it can also put you at a disadvantage. Not only will you absorb the full brunt of declines such as the one we’ve been living through, but it also leaves you with very little dry powder to invest when stocks do fall. However, with just a little more activity and attention, investors can keep an eye on stock valuations and adjust how much they have invested based on how pricey the market is.

If your all-in moments are restricted to times when the market is trading near or below its long-term average valuation, then you can shift the odds of market-beating returns further in your favor. Fortunately, there are many great tools available for tracking the overall market’s valuation, including my favorite, professor Robert Shiller’s 10-year average P/E spreadsheet.

When it comes to individual stocks, though, the picture is a little bit different. Although elite investors like Berkshire Hathaway’s (NYSE: BRK-A) Warren Buffett can make comments about being willing to go all in on Wells Fargo (NYSE: WFC), most mere mortals are best served by avoiding an all-in call — having their entire portfolio — on a single stock.

Putting away the cards
While having a working knowledge of poker might help bring some of the lessons above to life, you don’t have to ever play a single hand to put them to work. To review, here are three of the investing lessons that we can take from the poker table:

1. Wait for the best investment opportunities — there’s no harm in passing on a stock if you aren’t convinced that it’s a worthwhile investment.
2. Always be on top of new information and be willing to take action when necessary.
3. Going “all in” in your portfolio should be reserved for when market factors are highly attractive.

You can take these three lessons and start putting them to use right now.

Source: Fool.com