Retiring with a million is an achievable goal for many investors. Key to realising that aim is starting to invest as early as possible to allow compounding to have a greater impact on your overall performance.
Furthermore, by investing through bear markets, it may be possible to enhance your returns due to obtaining a more favourable risk/reward ratio. And, through focusing on long-term growth trends, you may be able to further increase your retirement nest egg and boost its chances of being valued at over a million.
Starting to invest as early as possible could mean that buying shares today is a good idea. Certainly, there are risks facing the world economy, such as a trade war between the US and China, which could lead to disappointing performance in the short run. But there are always risks facing investors that could easily dissuade them from buying stocks.
As such, starting to invest today could improve your returns through allowing compounding to have a larger impact on your portfolio value. With it being cheaper than ever to buy a diverse range of stocks through an online sharedealing account, starting to invest with even a modest amount of capital is possible. This could enhance the likelihood of obtaining a seven-figure retirement portfolio.
Invest through bear markets
A bear market could take place over the next few years. After all, the world economy has experienced a period of strong growth since the financial crisis that has produced a bull market for global equities. History shows that a bear market has always followed a bull market, which could mean that many shares experience a difficult period.
This may cause some investors to focus on less risky assets, such as cash and bonds. However, the most logical step to take during a bear market could be to purchase high-quality stocks while they trade on low valuations. This may improve an investor’s risk/reward ratio, and allow them to generate higher profits through buying stocks at a discount to their intrinsic values.
Focus on long-term trends
In terms of where to invest, focusing on long-term global trends could be a sound move. For example, an ageing population may mean that companies which are focused on senior living opportunities enjoy a tailwind. They may see a rise in demand for products and services that aid retirees with everyday tasks.
Likewise, changes to the financial services and banking sector could produce opportunities for technology companies that are better able to meet evolving consumer tastes.
Clearly, it is impossible to predict exactly what the world economy will look like in upcoming decades. But by allocating your capital to areas that are likely to experience favourable operating conditions, it may be possible to enhance your overall returns. This could improve your chances of generating a seven-figure portfolio that offers a generous level of passive income in retirement.