Summary of “How To Quit Working In 5 Years With $330,000 In Savings” by Michael Foster

Michael Foster is writing about a very interesting topic—early retirement. This article speaks directly to all the millennials out there who want to retire early and not work into their 40s and 50s. He starts off by stating that many millennials are beginning to live very simple lifestyles so they can place a majority of their income in a savings account. This lifestyle, to most baby boomers, is very mainstream and untraditional. To millennials however, the idea of taking a few years off work spurs their interest. Most millennials, according to Foster, get frustrated or burnt out with modern working conditions and need some time to relax. So, Foster gives an example of how a fictional worker …show more content…
In this scenario, Jane invests all of her money in 500 shares of S&P, and needs an annual return of about 8.2% per year. Foster acknowledges that this is a very risky strategy but it is the easiest road to early retirement. Any ways, Fosters says that there are two ways to going about getting that 8.2%. The first way is to rely on capital gains and dividends, and the second way is to rely on just dividends. In this scenario, Foster likes the idea of relying on strictly dividends because that way Jane doesn't have “to worry about transaction costs, selling during a downturn, and so on” (Foster, seekingalpha.com). In order to ensure the 8.2% return comes from just dividends, Foster recommends that Jane sell her 500 shares of S&P and invest her money into 4 new stocks: MAIN, NIE, PDI, and PCI. These are large-cap stocks and high yield corporate bonds. Once in these new stocks and bonds, Jane’s dividends are estimated to be north of 10% (higher than the original 8.2%). With this new figure in mind, Jane’s dividends could be cut by 20% and she still would have enough income to cover her