Best Investments for Early Retirement Planning
Where to put your money for maximum growth when you're retiring decades early.
By CashSmartGuide Editorial Team - Last updated: January 2026 | 6 min read
Early retirement isn't just about saving more—it's about investing smarter. Put your money in the wrong places and you'll run out at 75. Pick the right investments and your portfolio can last 50+ years.
The challenge is you need aggressive growth to build wealth fast, but also need enough stability so a market crash doesn't destroy your plans right before you quit working.
This guide shows you exactly where to invest for early retirement, how to balance growth and safety, and which accounts to use at different stages of your journey.
The Quick Answer
For early retirement, focus on low-cost index funds (80-90% stocks when young), max out tax-advantaged accounts first, then invest heavily in taxable brokerage accounts for early access. Shift to 60-70% stocks as you near retirement. Avoid individual stock picking, crypto gambling, and high-fee actively managed funds.
Core Investment Strategy
Early retirement requires a specific approach. You need decades of growth, not just safe preservation.
The Early Retirement Portfolio
Ages 25-35 (Building Phase)
Go aggressive. You have 15-25 years until retirement.
- • 90% stocks (total market index funds)
- • 10% bonds
- • Focus: Maximum growth
Ages 35-45 (Growth Phase)
Still aggressive but slightly safer as retirement nears.
- • 80% stocks
- • 20% bonds
- • Focus: Sustained growth with some protection
5 Years Before Retirement
Shift to more conservative to protect gains.
- • 70% stocks
- • 30% bonds
- • Focus: Protecting what you've built
Early Retirement Years
You still need growth for 40+ years ahead.
- • 60-70% stocks
- • 30-40% bonds/cash
- • Focus: Growth + 2-3 years cash buffer
Why Stay Aggressive?
Traditional retirement advice says go conservative at 65. But if you're retiring at 40, you need 50+ years of growth. Going too conservative too early means your money won't last. Keep 60-70% in stocks even after you retire.
Best Investment Types
1. Low-Cost Index Funds
The foundation of early retirement investing. Simple, effective, proven over decades.
Best options:
- • Total Stock Market Index (VTI, FSKAX) - Own entire US market
- • S&P 500 Index (VOO, FXAIX) - Top 500 US companies
- • Total International (VXUS, FTIHX) - International diversification
- • Total Bond Market (BND, FXNAX) - Stability portion
Why this works: Low fees (under 0.05%), automatic diversification, historically 7-8% annual returns. Warren Buffett recommends this for most people.
2. Target Date Funds
Automatic portfolios that adjust allocation as you age. Good for hands-off investors.
How it works:
Pick a fund with your target retirement year. It starts aggressive and automatically becomes more conservative over time. Example: Vanguard Target Retirement 2045 Fund.
Downside: Slightly higher fees than building your own portfolio with index funds. But worth it if you won't manage it yourself.
3. Real Estate (Carefully)
Can accelerate early retirement but adds complexity and risk.
Options:
- • Rental properties - Generate income but require management
- • REITs (VNQ) - Real estate exposure without hassle
- • House hacking - Live in one unit, rent others
Reality check: Being a landlord is work. Many early retirees regret buying rentals because it's not actually passive income. REITs are easier.
4. HSA (Triple Tax Advantage)
If you have a high-deductible health plan, max your HSA. It's the best retirement account available.
Why it's powerful: Tax-deductible contributions, tax-free growth, tax-free withdrawals for medical expenses. After 65, works like a traditional IRA for non-medical expenses.
2026 limit: $4,300 individual / $8,550 family
What to Avoid
Individual Stock Picking
95% of people who pick individual stocks underperform the market. You're not smarter than Wall Street professionals. Stick with index funds that own everything.
Cryptocurrency
Too volatile for early retirement. Maybe 5% of portfolio maximum if you're really into it. But your core retirement savings should not be in crypto.
High-Fee Actively Managed Funds
Funds charging 1%+ in fees destroy returns over decades. A 1% fee costs you 25% of your portfolio over 30 years. Use funds with fees under 0.20%.
Keeping Too Much in Cash
Cash loses to inflation. Don't hoard money in savings accounts. Keep 3-6 months emergency fund in cash, invest the rest.
Which Accounts to Use (In Order)
Account choice matters as much as investment choice. Follow this order for maximum benefit.
401(k) to Employer Match
Free money. Always contribute enough to get full match. Typically 3-6% of salary. This is a 100% instant return.
HSA (If Eligible)
Max this out if you have high-deductible health plan. Triple tax advantage beats everything else.
Roth IRA
$7,000/year limit. Tax-free growth forever. Plus you can withdraw contributions anytime penalty-free (important for early retirement).
Income limits apply: Phases out at $150,000 single / $236,000 married
Max 401(k)
$23,500/year limit ($31,000 if 50+). Tax-deferred growth. Your biggest retirement savings vehicle.
Taxable Brokerage Account
After maxing tax-advantaged accounts, everything goes here. Critical for early retirement because you can access this money anytime without penalties.
Early Retirement Strategy
Most early retirees need significant money in taxable accounts because 401(k) and IRA are locked until 59½. Plan on having at least 5-10 years of expenses in accessible accounts. Learn more in our FIRE method guide.
Sample Early Retirement Portfolio
Here's what an actual early retirement portfolio looks like at different stages.
Age 30 - Building Phase
• 401(k): $50,000 (65% VTI, 25% VXUS, 10% BND)
• Roth IRA: $15,000 (same allocation)
• Taxable: $10,000 (same allocation)
Total: $75,000 | 90% stocks
Age 40 - 5 Years Before Retirement
• 401(k): $500,000 (60% VTI, 20% VXUS, 20% BND)
• Roth IRA: $150,000 (same allocation)
• HSA: $50,000 (same allocation)
• Taxable: $300,000 (same allocation)
Total: $1,000,000 | 80% stocks
Age 45 - Retired
• 401(k): $700,000 (60% stocks, 40% bonds - let grow)
• Roth IRA: $200,000 (60% stocks, 40% bonds - let grow)
• HSA: $75,000 (let grow for future medical)
• Taxable: $500,000 (50% stocks, 30% bonds, 20% cash)
• High-yield savings: $100,000 (2-3 years expenses)
Total: $1,575,000 | 65% stocks overall
Notice the taxable account is heavily funded for early access, while retirement accounts continue growing for later years.
The Bottom Line
Early retirement investing is straightforward: low-cost index funds in tax-advantaged accounts first, then taxable brokerage accounts. Stay aggressive with 80-90% stocks while building wealth, then shift to 60-70% stocks once you retire.
Avoid the temptation to pick individual stocks, chase crypto, or use high-fee funds. These mistakes cost you hundreds of thousands over decades. Boring index funds consistently beat 95% of investors trying to be clever.
The key difference from traditional retirement: you need significant money in taxable accounts for early access before 59½. Plan on having 5-10 years of expenses accessible outside retirement accounts. This lets you use Roth conversion ladders and other strategies to access retirement funds later. Check out our guide on how much you need to retire at 40 or 50 to calculate your target.
Related: Plan Your Early Retirement
Financial Disclaimer
This article provides general educational information about investment strategies for early retirement and should not be considered personalized investment advice. Investment decisions should be based on your individual financial situation, risk tolerance, time horizon, and goals. Past performance does not guarantee future results. All investments carry risk including potential loss of principal. Market returns, tax laws, and account contribution limits are subject to change. Before making investment decisions, consult with qualified financial advisors and tax professionals who can analyze your specific circumstances and provide personalized recommendations.