When I eventually retire, I know for certain I'd rather go fishing or spend time with my family before worrying about my finances.
That's why I'm taking steps to secure the lifestyle I want, right now.
It really doesn't matter how you go about saving and investing for your retirement, as long as you do it successfully. There's no hard and fast rules because the strategy I use may not work for you.
For example, I hope to at least save around $1,500 per month to invest and achieve an average annual return of 10% on my money, over the next 20 years. With compounding returns, according to the Moneysmart website, I'll have over $1.03 million to retire on.
So how do I plan on achieving a 10% annual return on my money? The answer: In the Australian stockmarket.
According to AMP Capital, over the past 114 years, the Australian stock market has achieved a 12%pa return. Looking at my 10%, it appears to be conservative. But I'll err on the side of caution.
That's because this strategy is easier said than done. Sometimes we let our emotions get the better of us and bad things happen.
However by picking established companies with a proven track record of success, wide moats and solid long-term growth prospects we greatly increase our chances of beating the market, and reduce the likelihood of making mistakes under pressure.
Here are three unloved companies with cheap share prices, successful track records, capable management and, best of all, generous dividend yields.
1. BHP Billiton Limited (ASX: BHP) released a solid set of production results earlier this week which prompted investors to bid up the company's share price. As a low cost producer with diversification across commodities, BHP is worthy of a spot in ultra-long-term investors' portfolios.
2. Rio Tinto Limited (ASX: RIO) has also been kicking goals on the operations side of business. Posting sizeable increases to iron ore and copper production for the first half of FY14. At current prices, I think Rio is also worthy of a spot in retirement portfolios.
3. Coca-Cola Amatil Ltd (ASX: CCA) is currently trading at a significant discount to its share price 12 months ago, down almost 30%. However with significant competitive advantages over new and existing rivals, now could be the opportune moment to consider adding some CCA shares to your portfolio.
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For a well-diversified retirement portfolio, I believe each of these companies would fit nicely. However, there's one other ASX dividend stock I think investors should consider buying first…
