How A 28-Year-Old Who Retired With A $2 Million Net Worth Is Investing In 2017

In 2016, JP Livingston celebrated her 28th birthday. She also retired. Last month, I spoke with her about how she was able to retire, despite the fact that she only graduated from college about seven years ago. JP (a pen name she goes by on her blog, was able to retire because of her high earnings, lofty savings goals and disciplined investment techniques. Her investment strategies are part of what allowed her to build a net worth of about $2.25 million.

With less than a week left in the year, so many of us are setting goals for the new year, which includes figuring out an investment plan for 2017. Deciding on investment strategies or goals can help us figure out what we want our long-term financial picture to look like, and shape our budget for the coming year. When laying out an investing plan, who better to learn from than a woman whose investments boast high returns, and who retired before 30? In our Q&A, JP discusses her personal 2017 investment plan, and provides useful insights for investors looking to build their nest egg more aggressively. This interview has been edited for brevity.


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Maya Kachroo-Levine: You’ve had investments of over $1 million yield a 13% return ($130,000) in just one year. Can you speak to your investment strategy that year, and can you walk us through your 2016 investment strategy?

JP Livingston: My investment strategy for several years has been a twist on a broadly discussed strategy to go long on equities.

Many financial experts (those who aren’t compensated for getting you to invest a certain way) will tell you that if you are young and in the wealth accumulation phase of your life, to consider parking your money in a low-cost index fund, for example, Vanguard’s Total Stock Market Index Fund (VTSAX).

There are a few key arguments for this strategy. First, it’s a nice hedge against inflation because the companies in the index are presumably raising their prices with inflation; since companies are valued on a multiple of revenue or profit, this will be captured in the growth of the stock market.

Secondly, and most importantly, is that it’s hard to argue with its results. The compound annual growth rate for stocks on the S&P Index for the last 30 years has been 11%. There are very few if any opportunities available to us regular individual investors that can top that kind of return for the risk. (Note: you’ll get an entirely different view from hedge funds or mutual funds. They believe they can beat market returns and so they charge high fees for their time and efforts. A few of them are worth it. Most of them are not).

Kachroo-Levine: What are you planning on changing about your strategy in 2017?

Livingston: As a retiree, steady cash flow is going to matter more to me than it has in the past. There are only two ways to make money: appreciation and income. Stocks, for example, are about appreciation—you make very little money on a regular basis (usually a puny 1%-2% in dividends), but a year or two or three later, you can sell it for much more than you paid and pocket the difference. A heavily appreciation-based strategy, like going 100% into index funds, will no longer meet my needs.

Income-based strategies, by contrast, put a steady paycheck in the spotlight. Bonds are generally purchased for the interest they provide. Sure they can appreciate or depreciate in value, but the bulk of your return from a bond comes from the monthly or quarterly dividend it pays.

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