Kris’ note: Your editor is biased, but we just love this essay from Dave Forest. It contains everything. It addresses a problem that many Americans face today (high and rising living costs), and provides a solution to deal with that problem.
And while the mainstream, government, and Federal Reserve have been quick to downplay any threat of ongoing inflation, the reality is most people can see the effect it’s having on their own budget.
That makes this essay from Dave especially timely. We hope you enjoy it…
By David Forest, editor, Strategic Trader
At the end of every month, I sit down and figure out what I spent. I tally up food, gas, entertainment, and other costs of daily living.
I don’t have to do it. I’m not on a budget. But I find it interesting to see how much people spend to live.
This is the crux of planning for retirement. To figure out how much to save, you need an idea how much you’re going to spend.
According to the Bureau of Labor Statistics, the average household aged 65 or older spends $50,220 per year.
At age 75, living costs are about $43,623 yearly.
That’s the average. You might need more, or you might need less, depending on your plans. But that’s a ballpark target on what’s needed to be comfortable when you stop working.
So what does it take to pay for a year’s worth of retirement?
Let’s say you invest a retirement savings of $172,000. You’d need to make a 29% return in order to make $50,220. And you’d need a return of just over 25% to make $43,623.
Those returns are possible investing in the S&P 500. In 2019, the S&P returned 28.9%. In 2013, it did 29.6%.
But here’s the problem: that’s cutting it a little close. Plus, the S&P isn’t a reliable year-in, year-out gainer.
For example, if you’d invested $172,000 in 2016, you would have made just $16,409, a 9.5% return.
That’d cover less than half the yearly spending for an average person in retirement. And 2020 was a mediocre year, too.
A Little-Known Strategy Fit for Billionaires
The S&P delivered about 15% in 2020. That’s solid – but not nearly enough for a year’s worth of living.
What really worries me, though, is the down years.
In 2008, for example, the S&P lost 38.5%.
And between 2000 and 2002, the S&P had a run of three straight down years.
An average investor in 2000 to 2002 would have lost the equivalent of 1.5 years of retirement living expenses. That’s a devastating result.
I think the risk of losses on major stocks is one of biggest obstacles to people saving for retirement. I’ve spent years trying to figure out a safer way… without compromising upside.
Fortunately, I got that chance when I met John Pangere, my friend and co-editor at Strategic Trader.
John showed me his research on a type of investment called “warrants.”
Most investors have never heard of them. But they’re commonly known in the financial community. And in fact, their potential is so explosive they’re used by some of the world’s most prominent investors… including Warren Buffett.
Regular readers know I’m a geologist by trade. And commodities are my bread and butter. I’ve used warrants many times as part of investments I made in mining companies.
In fact, I’ve even issued warrants to billionaire investors in companies I created in the past.
But John showed me ways to use these little-known securities to invest in some of the biggest, most mainstream sectors of the stock market.
And it can have a massive effect on your retirement savings.
4,942% in Less Than a Year
To illustrate this, let’s look at the performance of a real-life warrant for a company called Purple Innovation (PRPL). It’s a very basic business. It sells mattresses.
We recommended this warrant to our Strategic Trader subscribers in early 2019. And our readers cashed out in October 2020 for a 4,942% gain.
The really amazing thing is, those gains happened in under a year. And you don’t need a lot of money to have a big impact.
Readers could have gotten in on the Purple Innovation warrants for as little as 19 cents. A simple $1,000 investment would have turned into $50,421 in less than a year. That’s enough to cover a year of living expenses in retirement.
By comparison, a $1,000 investment in the S&P 500 would have turned into just $1,171.
But here’s the best part.
The past year was a tough one for the stock market. But even if stocks had taken a 38.5% shellacking like in the 2008 crash, you’d have only lost a measly $385 on your $1,000 investment in Purple Innovation warrants.
You might have to cut back on Starbucks lattes for a month or two. But it wouldn’t affect your ability to cover rent, food, or other necessities.
This shows the power of warrants for the average investor looking to grow their savings for retirement… without risking it all.
More Than Just Beginner’s Luck
When people hear this, they sometimes think I’m cherry-picking an exceptional case. After all, there are some rare stocks that return 1,000%+ gains to investors.
But with warrants, these outsized gains are much more common than with regular stocks.
Another of our Strategic Trader recommendations, Blink Charging warrants, gained 2,805% in five months. That’s enough to turn a $1,000 investment into $29,050.
Six other warrants in our current portfolio are up between 100% and 1,622% as I write. Solid gains. And I believe they could see explosive growth like Purple Innovation and Blink Charging as their momentum picks up.
The only other way to get gains this size is by using complicated financial instruments like call options or cryptos.
But it’s dangerous to push beyond your comfort zone in investing. Options are great for sophisticated investors who can dedicate a lot of time to studying the markets. But for regular folks saving for retirement, they’re extremely risky.
Warrants, on the other hand, trade just like regular stocks. You don’t need a special account – or insider knowledge – to buy them. You just plug in the ticker symbol like you would with any stock. You can even buy warrants through most online discount brokerages.
This is the retirement answer we’ve been looking for. It combines the high upside potential of specialized stocks… with the ease of mainstream indexes.
How to Put Warrants to Work in Your Portfolio
You can make life-changing profits, on easy-to-understand businesses, without risking large sums of money.
That’s why John and I are over the moon to share this life-changing strategy with investors.
If you’re looking for a way to change your financial future forever… please have a look at my special briefing on this little-known corner of the finance world. And learn how you can use my top picks to supercharge your portfolio.
Keep walking the path,
Editor, Strategic Trader