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I plan to retire early by building a diversified portfolio of growth and stocks.
Investing in UK shares can be a great way for individuals to build long-term wealth. They have averaged a 10% annual return over the past ten years.
This is the type of return that helps regular investors retire comfortably. But I’m not content to wait a few decades before closing my desk. I am looking to create a healthy second income that I can live off of as soon as possible.
Early retirement
I am trying to achieve this by carefully researching and buying a wide range of UK stocks. That’s the opposite of buying a tracker fund that follows broad movements in a selection of British stocks. of iShares Core FTSE 100 ETF Following Footsie is an example of this.
I am confident that I can average 12% to 15% long-term returns by picking individual stocks. Successfully hitting this investment goal can realistically shave years off my retirement age.
Let’s say I have £250 a month to invest in shares. If UK shares continue to generate the 10% average annual return they have achieved over the past decade, I will have a healthy £493,400 after 30 years.
If I applied the 4% withdrawal rule I would have earned £19,376.
But, if I can hit that 15% annual rate of return, I’ll have a healthy second income A full six and a half years ago.
Buying dividends
I think buying dividends is a particularly good way to achieve my investment goals. The regular income they produce can be reinvested so I can grow my income through the miracle of compound interest.
Diversified stocks can help my portfolio weather tough economic times better, providing a more consistent long-term return.
Income reserves, for example, can protect me from runaway inflation. Moreover, the non-cyclical nature of many income stocks (such as utilities, telecom and defense companies) gives them greater earnings stability at lower levels.
I own 2 income shares
Persimmon One is the top. FTSE 100 A dividend I bought to help me retire early. It’s attracted by its double-digit yield, currently index-led at 15.3%.
It is true that the home builder may face some problems in the near term as rising interest rates reduce home sales. But in the long run, I think I’ll be able to supply admirably to meet demand as construction costs continue to rise. For example, the National Housing Federation currently says 340,000 new homes are needed each year.
I have invested in a stock that yields 4.3% Tritax Big Box REIT. I think the growth of e-commerce will drive demand for warehousing and logistics centers, resulting in impressive shareholder returns. Although the lack of access to good assets could negatively impact its growth prospects.
I also like TriTax because, as a real estate investment trust, it pays out 90% of annual profits in dividends.