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A Long Term Investment Plan for Future Retirees

This is Troy’s second post here at Eyes on the Dollar. Feel free to check out his first one here.

When I started writing this post, I originally had the intention of creating a step by step plan for future retirees. I had it all laid out – how much money you need to retire, what kind of investment returns you need to achieve your goals, and how much money you need to set aside each year.

However, after writing a third of the post, I decided to scrap the whole thing and start anew. Why? Because there is no one-size-fits-all plan.

Some people experience two mega-recessions in their lifetime that wipe out 50% of their networth, while others don’t. Some people will lose their jobs and others won’t.

Every person is different. We all make different amounts of money, we all live different lifestyles (from a financial perspective), and our preferred investment methods are all different. As a result, any step by step long term investment plan is useless, because very few people will fit the mold!

Instead, I’ve decided to create a post that details how to maximize your future retirement. What are the best ways to ensure that you end up with as big a nest egg as possible?

Understand the Trends

The age of just buying and holding stocks for 30 years is over. Investing is getting more and more difficult. As a result, you need to get a better grasp of the mega-trends that we’re going to have over the next 30 years if you want some above-average returns.

Right now, there is only one clear trend.


Commodities are in a mega-bull market. Sure, gold prices may have fallen for almost a year, but such a correction is normal in any long term secular bull market. The reason for commodities (e.g. oil, gold, agricultural products, metals) rising in price is fairly simple. The fundamentals support it:

  1. As emerging economies continue to develop, they will need more and more raw materials for their infrastructure and building programs. The funny thing is, these emerging countries tend to also be some of the most heavily populated countries in the world (e.g. Asia). Thus, their building programs will be massive, causing a huge upshift in demand for commodities.
  2. Many commodities are simply nonrenewable. Metals, fossil fuels, etc. As we use more and more of these commodities, we are also able to use less in the future.

If I was a long term investor, I would definitely consider putting some commodities into my portfolio. No, these are not just hedges against inflation – these are the future.

Create Side Income Streams

Warren Buffett is famous for preaching “Just buy and hold! This is America – the land where all asset classes go up tine the long run!” See, the thing is, it’s easy for Buffett to buy and hold. For the Average Joe who is living off of that one paycheck? Not so easy. Here’s why.

Let’s assume that you work for AT&T, and you’re making $70k a year. In other words, you’re a fairly average guy who is barely making ends meet at home. You set aside $5000 a year for your retirement fund, and using that money you go out and buy whatever stocks tickle your fancy.

The economy is doing fine, and your finances seem to be on track. One day, the economy turns sour and people are getting the ax left right and center. You’re desperately holding onto your job, and you’re afraid of putting anymore cash into stocks because hey, you might be out of a job tomorrow! Months go by, the stock market losses 40% of its value, and BOOM, you’re fired!
To put food on the table and pay the bills, you’ve got to dig into your stock account. Unfortunately, stocks are selling at ridiculously low prices, but hey, you need that money. So you sell many of your stocks at the bottom of the market, because 2 months later the market bottoms out.

Such a situation is far too common. It can happen to your uncle, you’re brother-in-law, or your neighbor.

For the Average Joe, it’s not that they don’t want to buy and hold. It’s that in many cases they can’t. They don’t have any other source of funds to fall back on in hard times. Thus, they sell at the worst time possible, just before the market rebounds.

For Buffett, buying and holding is easy. Even if he loses 99% of his money he’d still have around half a billion big ones. He doesn’t have the lifestyle worries that you and I have. In addition, many of Buffett’s companies such as insurance companies are cash cows. Even when the economy is poor, his cash cows will still generate cash flow. Thus, when everyone is cash strapped, he can snap up deals all over the place because he has the cash.

Thus, any successful long term investment strategy must incorporate a cash machine. Start your own part time side business. It can be anything – an internet company, an e-seller, or a blog. That’s what I’m doing. I’m trying to grow my blog so that one day it rivals that of The Big Picture (which has around a million views a month). Pretty ambitious goal, but each journey is begun with a single step (sounds like something epicly philosophical from Kung Fu Panda).

If you have your own part time side gig, you won’t worry so much when the economy turns south. You’ll have other sources of income to live off of in case you lose your job. That way, you can buy and hold no matter how bad the economy is (if that’s what you choose to do).


This last one is such a cliche. Of course you have to save money if you want a viable retirement plan! That’s what every personal finance blog out there preaches!
For the sake of freshness, I’d like to point out something that many people do not realize. People think that when you cut down on costs, you have to cut down on quality.

That is not true. I still wear Adidas & Nike clothing (yea I’m pretty athletic – I like loose clothing), and no, I don’t pay $40 per sweater. I buy them when they are on sale at Sears for $15 each.

Instead of spending less, spend smart. Wait for the better deals, particularly during on-season sales. Let me give you another example. If you’re an avid snowboarder like I am, you’d know that snowboards can get pretty expensive. A good board (just the board alone, not including the bindings) will cost upwards of $500 if you buy it during winter.

Instead, I’ve found that snowboards are always cheapest around September. They take out last year’s models (as if there was any real difference) and slash prices by over 50%. That’s how I paid $270 for a board that normally retails at $600.

Spend smart instead of depriving yourself. That’s the lesson of this story.

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.


  1. I think that any people could avoid tapping the money they have invested in the market if they planned for today and had an adequate savings cushion should a job lose occur. If that was taken care of, then the majority of people wouldn’t need to resort to using their investments to get by.

    Also, I agree that commodities serve a purpose in any well-diversified financial plan. As long as you are diversified across a broad spectrum of asset classes, you will be able to handle any bumps in the road with much more ease. I would be cautious to put too much money into one asset class, including commodities simply for the fact that it would be too volatile for the average investor. So many are scared to even invest in the market right now.

  2. I always enjoy reading your investment posts Troy. I literally know little to nothing about investing in the stock market. I definitely like the idea of creating different streams of side income which I am trying to do. I would love it if one day you wrote a post on how to invest for beginners.(where to go, what to do, how to keep it simple and unintimidating)

  3. LOVE this, Troy, especially about smart spending! Also, the part about buy and hold not being reasonable for everyone explains, I think, why investing makes me so darn nervous. Thanks!

  4. I love the practical tips you give in this post. While it may seem like creating side income and saving are things you hear all the time, it’s so important to take them to heart and start actually doing them. Side income is very difficult to pursue imo because it can easily take up all your free time, but it’s so worth it when you start bringing in revenue.

  5. Troy,
    Your thoughts on commodities is thorough and excellent. Thanks for being so convincing.
    I will say, if I was bringing home more than $70k a year I would definitely be more than making ends meet! Then again, I don’t have kids ๐Ÿ™‚


  6. Debt and the Girl

    Investing is still a new and tricky subject for me. that is why I am always interested in getting more tips and making the best of the funds that I have.

  7. The basis for investing is you can leave that money in for at least 5 years. Obviously, retirement money is more like 40 years. I think everyone should have some kind of emergency fund or access to cash for short term issues. If you live within your means , yu can weather most issues and leave your investments alone.

  8. I am investing quite a bit in commodities and do have some gold at the moment but while I see true value in agricultural products or oil, gold makes me feel funny, its price, like diamonds is mainly what people say it is worth and not based on a real use you make of it. The central bank stocking gold is only because people trust it has a value, whereas wheat or oil is needed on a daily basis.

  9. Market trends keep on changing and we cannot predict the upside downs of our investment. Creating side income streams can definitely help us if are planning for a better retirement life. Saving of course has to be give priority and as you say Troy, spending smart way by waiting for those deals can save really a good amount for our wallet

  10. Since I have already had to cash in what would have been a great retirement account, creating side income streams during my retirement will be a must. I hope peer-to-peer lending is here to stay because I think it has tremendous possibilities as one of those streams.

  11. Couldn’t agree more about building income streams and saving. Buy and hold is long from dead though, as long as you’re using index funds. It’s still by far the best way for people to invest for the long term.

  12. I agree with you on Buffett–who’s a wise man and I don’t sense any guile within him. BUT if you get axed and need access to your money, then you may need to sell, and sell during a downturn!!

    I’m curious though, what type of limits do you set for when you will sell? Some companies we invest in will decline. What factors help you decide when to get out?

    Great post Troy!!

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