The Plan’s Goals Are:

1.  Create a self-managed retirement savings fund.  See the Why Self-Direct Investing tab for reasons why you’d want to do that.

2.  Keeping the seven-year rule in mind, Average a long-term 10% annual return.

What’s the seven-year rule, and why mention it?

Per the oft quoted seven-year rule, a 10% return every year for seven years will double an investment portfolio’s value.

A portfolio returning 10% would therefore double seven times in 50 years.  If invested with discipline in an income tax free IRA, an initial investment of $5,000 will have become a well over half million dollar retirement fund in 50 years.  No way, of course, that a portfolio would provide a 10% return every year.  But an average of 10% over seven years will usually come close to doubling its value.

Is a long-term average 10% return a reasonable goal?

Webster’s New World College Dictionary definition of the noun “plan” is: “any detailed method, formulated before-hand, for doing or making something.”

Answer to the question is yes, because the plan’s logic supports the definition’s implications:

  • there are clear goals,
  • that the planner understands the difficulties in meeting those goals,
  • and that the plan developer has thoughtfully reasoned out a plan to overcome those difficulties in order to achieve the goals.