One of the things that investors of all ages fear is that their retirement investing won’t generate enough income once they’ve stopped working. Addressing this concern is often a high priority for many clients of our Successful Investor Wealth Management service.

Automatic retirement investing profits from dollar-cost averaging

The best overall retirement investing plan is to start saving as early in your working career as possible, and to invest a steady or rising amount of money in the stock market every year. Following this plan, you automatically profit from dollar-cost averaging. You’ll automatically buy more shares when prices are low, and fewer shares when prices are high.

In retirement, you reverse the process. You live off your dividends, and sell stocks only when you need more money. When you do that, you sell your lower-quality holdings first. That way, you use your sales to upgrade the quality of your portfolio.

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Of course, you can improve your retirement investing returns and cut risk if you invest as we advise in our three-part Successful Investor approach. Invest your money mainly in well-established, dividend-paying companies. Spread your investments out across the five main economic sectors (Manufacturing & Industry, Commodities & Resources, the Consumer sector, Finance, and Utilities). Downplay or avoid stocks in the broker/media limelight.

That limelight tends to push up investor expectations to unrealizable levels. When unpleasant surprises come along, they can have a brutal impact on prices of stocks in the broker/media limelight.

Focus your retirement investing on the quality of your holdings—not the direction of the market

The funny thing is that this Successful Investor financial plan can lose effectiveness if you try to improve on it. For instance, as part of your retirement investing, you may decide to vary how much money you invest every year, depending on your view of the market outlook. That’s likely to cost you money about half the time. If you invest more money in years when you’re confident about the economy or market, you may wind up buying more shares when prices are high. If you cut back on your investing in years when the outlook is uncertain, you’ll buy less when prices are low.

In the course of your investing career, you’ll make some good guesses about market direction, and some bad ones; overall, they are likely to average out. That’s why it’s best to take a steady-state approach. It’s much easier to spot high-quality investments than to try to predict the next change in the direction of stock prices.

This plan is virtually guaranteed to produce great results for you, if you start early and stick with it. However, few investors do that. They simply face too many ways to get sidetracked.

If you’d like me to personally apply my time-tested investment advice to your portfolio, you should consider becoming a client of my Successful Investor Wealth Management service. Click here to learn more.