Have been fascinated by Mark Zuckerberg and the phenomenon called Facebook? We just lost another genius, Steve Jobs, who changed our world with his vision to make iPhone and iPad that we all love to own. You must be wondering, “What that has to do with how to grow your retirement account fast?”. It surely has a nexus — you can grow your retirement account simply by investing in companies run by these visionaries.
You and I don’t have to be as genius as Steve Jobs was to build a nice retirement nest egg. We simply have to take part in his success by investing retirement money in Apple. We don’t have to open an online retail business to emulate what Jeff Bezos has done with Amazon. We just need to invest our money in this online retail giant.
Invest in a great leader.
Every great company has a great leader who has vision and passion to create new products or services that world can’t live without. Bill Gates revolutionized personal computer industry with his vision to see everyone using personal computer. Microsoft has returned whopping 19,000 percent since its IPO. If you invested $399 in Apple shares instead of an iPhone in June 2007, you’d have tripled your money.
Legendary Fidelity Magellan fund manager Peter Lynch grew fund from $20 million to $13 billion in just 13 years even before the market boomed in 90′s. He used same simple approach to pick his investments.
My box theory.
It’s good idea to invest your retirement funds into a growth or an index mutual fund. But, the market has not returned much in last 10 years. Both DOW and NASDAQ are well below their historical highs so you are not even growing your retirement account at the rate of inflation with most mutual funds. There are some exceptions but, in general, your money has yet to make significant stride to grow your retirement account.
Two years ago, I started working on a theory or a method to beat the market. Idea is simple. I began with handful of companies run by great leaders — Apple, Amazon, Chipotle Mexican Grill, Bidu, Intuitive Surgical to name a few.
I found that these companies outperformed market by a wide margin. Yet, stock price fluctuated between the top or a resistance and the bottom or the support. This is akin to a ball bouncing between the top and the bottom of a box. As an investor you have an advantage of buying shares when price hits the bottom and selling those shares when price reaches the top. Most mutual funds can’t swiftly buy or sell shares as fast as an individual investor.
Set short-term goals.
You have to set investment goals and stick with your goals religiously without allowing emotions to creep in. I decided that, using the box theory, I will purchase shares of a great company with the short-term goal of selling those shares when I can make 10 to 15% return . I also decided to let cash sit aside if I can’t find shares at my predefined price.
Benefits of managing your retirement money.
There are several major benefits with self-directed IRA account; first, you don’t have to pay capital gains tax until you retire for a simple IRA and you won’t have to pay any taxes ever if you invest using funds from your Roth IRA. You also won’t have to pay fees and commissions that you normally have to pay if you invest in a mutual fund.
Can you beat the growth fund?
I started with $16,000 in one of my self-directed IRA accounts in 2010. At the end of 2010, I was able to grow my account to $21,000. That’s 31.2% return in the first year. At the end of 2011, my self-directed account has grown to $27,800. That’s 32.3% return in 2011. So, in two short years, my retirement IRA account has grown 73.7%.
Final thoughts.
I believe that you should invest in index fund or a growth fund that has shown superior return over the past 10 years. But, I also believe that you can grow your retirement account much faster starting with a small capital by investing wisely in great companies. The box theory proves that you can cash in on the price fluctuations — by learning how to use technical analysis combined with fundamentals — to generate amazing returns.
I would love to hear your ideas on how to grow retirement account without risking your financial future.
[...] How to Grow Your Retirement Account Fast Have been fascinated by Mark Zuckerberg and the phenomenon called Facebook? We just lost another genius, Steve Jobs, who changed our world with his vision to make iPhone and iPad that we all love to own. You must be wondering, "What that has to do with how… Read more [...]
[...] How to Grow Your Retirement Account Fast Have been fascinated by Mark Zuckerberg and the phenomenon called Facebook? We just lost another genius, Steve Jobs, who changed our world with his vision to make iPhone and iPad that we all love to own. You must be wondering, "What that has to do with how… Read more [...]
Your widget in the corner recommended this post when I was replying to a different one. This post is great! You touch on a delicate balance between what some would call timing the market and others would call seeking a great opportunity. I see this as seizing an opportunity. Your selection of stocks returning over 30% is very impressive. Although I have no desire to “beat the market”, I do plan to allocate a small amount of money each year to attempting to pick stocks in this manner. I also second the notion of using index and growth funds if you’ve got the proper time horizon.
[...] The surefire way to get off the financial treadmill is to keep growing income while maintaining same level of lifestyle. Every extra dollar earned should be invested into a tax deferred asset. [...]
Interesting approach. Some questions: how do you make the decision to take a “great” company out of the box? Nokia e.g. was for many years a darling of the stock market but at a certain moment lost its way.
And how do you decide what the predefined price is for which you want to buy that stock?
Personally I’m using long-term trend following with stock market index funds to grow my savings, but I’m always open to learn other trading and investing strategies that work.
Van, I keep an eye on the fundamentals(growing earnings per share and growing sales) along with technicals(stock trading over 50 day moving average) to consider it for the box theory. Then using trend lines, I find the top and the bottom. I buy stock when it comes close to bottom and sell it when it touches the top. If it breaks the top then I wait till it finds a new top. Now the previous top becomes the bottom( new box ).