The Secret to An Early Retirement

Some advice can be easy to understand, but hard to follow.

Take losing weight for instance. If you are looking to shed some weight, the answer can be as simple as regular exercise and a healthy diet. Thing is, not everyone may find the discipline to follow through on that advice.

The same may apply to investing for our retirement as well.

Keep it simple, but not simpler

Recently, one of US-based members – nicknamed “lovepeace” – announced that she will be able to retire early. When asked about her secret to retiring early, she shyly said that she “really didn’t do anything special”. Here’s what our member said:

  1. She saves as much as possible.
  2. She invests in one company a month.
  3. Because it’s only one company, she forces herself to be more diligent in her research.
  4. She takes a full month to study a company.

While our dear member is modest about her marvelous achievement, I found her thoughts to be profoundly simple and effective.

Simplicity is the ultimate sophistication

Saving well is the first step. If you are looking for help to start, here’s a few saving tips that can help you along.

And then, comes the part on investing. Here, our member smartly chose to focus on one company a month. Furthermore, she takes her time to study each company for a month. Implicitly, this means ignoring the daily gyrations the share prices (hint: share prices was not mentioned in her thoughts) and instead, decided to spend more time on understanding the business behind the ticker. The choice of one company per month also shows that she is focused on picking out the best company to buy. Above all, she was disciplined in her approach – diligently investing in one company per month.

A Fool’s take

Beating the SPDR STI ETF (SGX: ES3) – a proxy for the market barometer the Straits Times Index (SGX: ^STI) – may be possible if we find the discipline to follow the simple steps she describes.

Work hard, spend little, invest the difference. Take your time to study companies. Start with great businesses with great management teams. Invest for the long term. All these are not difficult ideas to understand – and ones that may help you towards an early retirement.

So, the only thing left to do is for us to follow it.

As one of our own Fools has shown, it may be achievable if you put your mind into it.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn't own shares in any company mentioned.