Government funded retirement programs are woefully inadequate. You pay contributions throughout your life in the hope of getting social security/pension. But two things work against you – an ageing population with more payments due and inflation. There are a number of alternatives, – keep your savings under the mattress, CDs also called certificates of deposits (low interest), loaning it on interest to friends (you may not get it back) bonds, properties, stocks etc. The list goes on and on. The best investment is always stocks. Over the last 50 years, Stocks have grown have returned more than the inflation rate. This is exactly what you need.

Your nest egg needs to grow and you should earn more than the inflation rate for this. Let us say, inflation is at 5%. If your returns are 4%, your nest egg has actually grown smaller. If you invest $100 today and get an average return of 17% year over year, at the end of 10 years, your capital has grown to $500.Anybody could look to the past and come up with a list of stocks that has provided these returns, but only very few can accurately predict what will happen in the future. So we take a calculated risk and invest.

Let us create a profile of the company that we think would succeed and provide stellar returns. The industry should be something that delivers day to day necessities, so that all products do not become obsolete at the same time. The company should have a history of delivering good products and services over a long time. The company should preferably be large cap that can weather storms such as slow downs, recessions etc.The company should have low debt, so that it is not saddled with a huge interest burden. The company also should have great cash reserves.

There is one company that today fits the bill. That is Wal Mart. Some hate it, some love it, but it is not going away.Wal mart is the largest retailer in the world, sells 40% of Hollywood’s DVD output, the largest retailer in the states. They have a simple business model. Offer merchandise at the lowest price. It is a $300B dollar company. But they sell day to day products. They sell more tobacco, candy, toothpaste, detergent, and pet food than anyone else in the country. Their business model is to make the common man’s pay go a little further. They have grown by 15% over the last 10 years. Their international business also grows annually.

The stock is quoted at $57 – a P/E of 18. They have also made it very easy for you to invest. You could buy shares directly in this company by investing $250 through Computershare.com. You could sign up for monthly investment of $25 for at least 10 consecutive months. They will reinvest your dividends too.

Always consult your investment advisor before you buy stocks.

Article summary :

Here is one stock that could fund your retirement. It is a behemoth, sometimes liked, sometimes hated. But no one ever complaints about its performance.