The longer you wait to start building your retirement nest egg, the more you'll have to put away to achieve your goals.
According to businessinsider.com.au, if you start saving at age 30 and want $1 million in your portfolio by the time you reach 65 and assume a 6% annual return rate on your investments, you'll need to save a little under $700 per month to reach your goal. However, if you start at age 40 you'll need to pocket $1,435.83 per month. At age 50, you'll need $3,421.46 per month.
After that, you don't even want to know what it takes.
The point is, you need to either start saving early or achieve fantastic returns on your investments (or both!). Personally I don't think 6% per annum is a good return. If I did, you wouldn't be reading this because I'd be out of a job!
However if your aged around 40 (or any age for that matter) and looking to be financially secure in retirement, chances are, your goal will be to achieve market-beating returns on your investments until you decide to hang up your boots. This greatly increases your chances of reaching $1 million.
However to aim for a percentage yearly return (eg. 11% p.a.) is fraught with risk and the market's volatility can quickly move your target closer or further away. So, it's important to focus on the big picture, i.e. the long-term.
Here are five stocks you could consider holding for the next decade and possibly even longer, to help you achieve your goals.
1. Slater & Gordon Limited (ASX: SGH) is Australia's leading Personal Injury law firm. It is rapidly growing exposure in the United Kingdom and pays a 1.4% dividend (which is likely to be increased in the years ahead).
2. BHP Billiton Limited (ASX: BHP) needs no introduction but deserves your attention. With a diversified asset base and huge free cash flows, BHP will keep digging up, processing and selling natural resources to customers around the world for many years. It is forecast to pay a 3.4% dividend fully franked.
3. Coca-Cola Amatil Ltd (ASX: CCL) bottles and distributes some of the world's most popular brands throughout Australia and neighbouring countries. It offers a 4.8% dividend with partial franking.
4. Village Roadshow Limited (ASX: VRL) is the owner of entertainment assets such as Movieworld, Wet'n'Wild, Village Cinemas and producer of blockbuster films such as The Great Gatsby. Leisure assets can sometimes be subject to swings in consumer confidence but Village Roadshow's business model has proven to stand the test of time.
5. Collection House Limited (ASX: CLH) is a debt collector or, more politely, a receivables management company which operates throughout Australia, New Zealand and The Philippines. It is expected to pay a 4.1% dividend fully franked in the next year.
Our BEST ASX dividend stock
If you're looking to build a new share portfolio and saving for your retirement today, it's important to remember that investing in the stock market is a marathon, not a sprint. For the best returns over time, it's important to hold growing companies which also pay juicy dividend yields.
