I Retired Early: The Best Investments That Got Me There

Who doesn’t dream of early retirement? Hanging out by the shore with a margarita in one hand and a beach read in the other? Paradise. But how do you get there?

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Never fear; GOBankingRates spoke to two experts who achieved financial independence and early retirement about the key investments that enabled their success. Here are their stories, their investments and the best tips for those looking to pursue the same path.

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Investing in Myself Was Key

Oscar Taylor became a self-made millionaire and retired at 26 by building and selling content sites, then investing the profits in cryptocurrency.

“Investing in myself is the best investment that got me there,” Taylor said. Since college, he invested 10% of income into courses and books. “This very quickly had a compounding effect, where I was making multiple thousands of dollars a month from my content sites while still being a student.”

Once graduating, Taylor sold sites for six figures, using the funds to heavily invest in crypto.

“All of this is possible because I invested in myself first. This is the priority and the most important thing you can do for your financial freedom,” he said.

Read Next: 10 Ways for Retirees To Cut Back on Expenses in 2024

Maxing Out Retirement Accounts

Walli Miller retired before 40, after a 19-year public service career, by maximizing retirement contributions.

“I focused on contributing the maximum allowable amount in both my workplace retirement account [and] in a Roth IRA because of the tax advantages,” Miller said. In 2023, she had her highest salary, yet she made more by passively investing in low-cost mutual funds.

“My number one tip: Avoid trend investing and focus on simple strategies,” Miller shared. Another key investment was in community — regularly meeting with others pursuing early retirement. “We’ve met monthly for years, inspiring, supporting and sharing lessons we’ve learned along the way.”

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Tips for Early Retirement

Here are a few pieces of advice for those aiming for early retirement.

Start Investing Early

The earlier you start investing, the more time compound interest has to grow your money. Open a retirement account in your 20s and invest consistently to benefit from decades of tax-advantaged growth, and watch your net worth escalate.

Invest in Income-Producing Assets

Generate passive income streams with assets like dividend stocks, online businesses or content sites. Multiple income sources compound, grow your net worth faster and provide financial resilience, allowing you to retire earlier.

Lower Your Cost of Living

Minimize expenses by downsizing, moving somewhere more affordable or embracing a minimalist lifestyle. The less you spend each month, the less you need to save for retirement. Tracking spending also helps you identify areas to trim.

Max Out Retirement Contributions

Save aggressively by contributing the annual maximum to workplace retirement plans, like 401(k)s and IRAs, to supercharge your nest egg. This shields more money from taxes, allowing greater compound growth over decades.

Take Advantage of Tax-Free Investments

Look into tax-free investments like municipal bonds to keep more of your investment income out of the hands of the tax man. Since municipal bond interest is exempt from federal taxes, and sometimes state and local taxes, they can generate income without dragging down returns — helpful when accumulating an early retirement nest egg.

Build Income Streams With Real Estate

Investing in rental real estate can provide ongoing passive income via rent, as well as long-term capital appreciation. Use real estate investments to establish cash flow streams that can replace active employment income. Transition properties to fund your lifestyle or sell them later at a profit to sustain early retirement.

Foster an Early Retirement Community

Surround yourself with others pursuing financial independence for motivation, accountability and knowledge sharing. Discuss strategies and pitfalls so you can all achieve your early retirement goals sooner.

The key is developing multiple income streams and optimized savings fueled by the power of compound interest over long time horizons. With diligence and the right community, you can escape the rat race and enjoy financial freedom on your own timeline — with or without the margarita.

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This article originally appeared on GOBankingRates.com: I Retired Early: The Best Investments That Got Me There