2014 has been a disappointing year thus far for Aussie investors. That's because the ASX is up just 0.5% since the turn of the year, which means that capital gains for many investors are less than the current interest rate of 2.5%.
That's enough to make any investor think that early retirement is little more than a dream. However, with the help of these three financial plays, an early retirement could be very possible and could come around sooner than you think.
Commonwealth Bank of Australia
Shares in Commonwealth Bank of Australia (ASX: CBA) have fallen by 2% since the start of the year and still don't appear to be cheap. For example, they trade on a price to book ratio of 2.53, which is ahead of the wider banking sector on 1.38.
However, where Commonwealth Bank starts to make sense as an investment is in terms of its income and growth potential. Shares in the bank currently yield a fully franked 5.4% and, with earnings set to grow by 5.6% per annum over the next two years, a premium share price could prove worth the outlay.
Westpac Banking Corp
It's a similar story at Westpac Banking Corp (ASX: WBC), where shares in the diversified banking group are flat for the year. However, with a fully franked yield of 5.6%, investors are still generating a decent return from their holdings in the bank.
Indeed, Westpac has considerable potential as an income play. With dividends being covered 1.3 times in the current year, there is scope for a higher payout ratio over the medium term. Furthermore, with earnings set to increase at an annualised rate of 4.9% over the next two years, Westpac seems to offer an attractive mix of income and growth prospects that could help you retire early.
Australia and New Zealand Banking Group
With shares in Australia and New Zealand Banking Group (ASX: ANZ) currently trading on a P/E ratio of 12.4, they seem to offer upside at a time when the ASX has a P/E ratio of 15.6. Furthermore, ANZ has upbeat growth prospects, with earnings forecast to be 22.5% higher in FY 2015 than they were in FY 2013.
This allows ANZ the room to grow dividends per share by 6.4% per annum over the next two years, which if met would improve upon an already impressive fully franked yield of 5.4%. Due to this potent mix of value, growth and income potential, ANZ could bring you a big step closer to retirement.
