This morning I updated my Stock Investor Pro database from the American Association of Individual Investors (AAII) source and ran a check to see how many stocks passed the Piotroski High F-Score screen. Only five out of nearly 10,000 stocks made the list and those special stocks are listed below for Platinum members.
While there is no question about Rule #1 of following The Golden Rule of Investing, all rules thereafter could come in any order. The second one I’ve selected is to know your retirement requirements. How much will you need monthly to live comfortably? It is not unusual to hear a figure of 80% of your last salary. I would set that as a minimum figure. If your last annual salary was $70,000 per year, then plan on living on a minimum of $56,000 per year. That might be a tight budget, and that is why I call it a minimum. There are possibly three financial legs to retirement: 1) Social security. 2) A pension if you are fortunate and 3) Your personal retirement savings accounts. Number three will most likely have two parts. Part one is the taxable portion and part two is the tax deferred portion, likely in the form of a 401(k) or 403(b) plan. In some situations the pension and 401(k) plan could end up as the same thing. Situations will vary from worker to worker.
Investors need to concentrate on the third retirement leg where you have control. The third retirement leg is definitely where we concentrate on this blog. Elsewhere on this blog I’ve shown probability examples of what it takes in savings and portfolio construction to lower the probability of running out of money during the retirement years. Here is a link to one such article. For more information, look up Retirement Planning under Categories in the right sidebar.
Within this second retirement rule is a corollary: pay down all debt before retiring. That means above all, no credit card debt and no housing debt. Get your financial house in order. The one big unknown expense during retirement is related to health so make sure your health insurance plan(s) are in order before retiring.
When planning for retirement requirements, aim on adding to your taxable investment account during retirement if at all possible. Dividends thrown off by the portfolio is one possibility. Perhaps your pension is sufficient to allow continued savings. Would that we were all so fortunate.
We now have the first two ideas in hand. 1) Save a sufficient amount for retirement and begin this process as early in life as possible. 2) Know your retirement requirements.
Photograph: This is Kipling, our new rescue dog who we officially adopted yesterday. He has been with us for a little over one week. We think he is a Bichon – Poodle mix.