By WallStreetDaily.com

• Shocking number of Americans aren’t ready for retirement.
• The No. 1 strategy if you’re reaching retirement age.
• Ignore this myth about savings, or regret it forever.
• Also recommended: Trump, the retirement savior?

Retirement is supposed to be a fantastic, worry-free phase of our lives.

But for many folks, approaching the end of their “working” lives is not met with joy.

A deep-seated fear takes hold instead.

That’s because a large number of Americans lack the money to truly enjoy their golden years.

In fact, nearly half of U.S. families are without any retirement savings at all, according to the Economic Policy Institute.

And another half — the ones who do have a nest egg — aren’t anywhere near a comfortable level.

But rest assured, there’s hope…

As senior analyst Jonathan Rodriguez points out below, there’s an asset class that could help blast your savings into hyper drive.

Ahead of the tape,

Louis Basenese
Chief Investment Strategist, Wall Street Daily

The Myth Holding American Savers Back

When it comes to personal wealth, there’s no question that stocks provide individuals the best opportunity to grow their savings over time.

This has been especially true over the last decade, with interest rates near zero and inflation practically a nonfactor.

According to data from financial author Joshua Kennon, for almost two centuries, stocks have generated an average inflation-adjusted return of 7%. That’s twice the real return of bonds, and dramatically more than gold.

But as you know, stocks come in all shapes and sizes.

These days, the average investor piles their money into large-cap stocks — through basket funds or individual names — and hopes for the best.

For most people with time on their side, that’s not a bad plan.

Large-cap stocks comprise the market’s largest, most mature companies with the most predictable cash flows.

And over the last 20 years, the S&P 500 has produced average annual total returns of 7.6% — well above the 4.1% annual return the 10-year Treasury.

But for folks that are behind on their savings or have none at all… taking on a little more risk could go a long way to building up retirement reserves.

Small Caps to the Rescue

Small-cap stocks — companies with market capitalizations of $2 billion or less — offer investors the best way to turbocharge their savings.

Since 1996, small caps have posted an average 10.9% total return per year — three percentage points higher than large-cap issues.

To be fair, small caps are historically more volatile than large caps.

In the last two decades, the Russell 2000 sports a standard deviation of 18.99% from the mean total return, versus 17.86% for the S&P 500.

Now, I know what you might be thinking…

Small caps appear to give savers a slightly better return over large caps. But they also feature a higher degree of risk.

And the trade-off can’t be worth it, right?

Well, here’s where things get really interesting…

The Tale of the Rolling Tape

As you can imagine, calendar-year returns only tell investors part of the story.

They tell you what you would have made on an asset, on average, if you had invested at one finite point in time and cashed out at another.

However, this is a little misleading.

Calendar-year returns usually represent periods starting in January and ending in December.

Rolling annual returns, on the other hand, measure all the one-year periods between two points in time.

This is much closer to what an investor would actually experience in the real world.

By viewing the returns of the S&P 500 and Russell 2000 on a rolling basis, the outperformance of small caps is far more profound — especially when you look at the biggest gains and losses.

According to financial analyst Dana Anspach, between 1973 and 2016, the S&P 500 posted its best year (61%) in the trailing 12 months ending in June 1983.

Its worst year produced a loss of 43% in the 12 months ending February 2009.

But over the same period, the Russell 2000 handed investors a 97% gain in its best one-year period (ending June 1983) and a 42% loss in its worst year (like the S&P 500, also ending February 2009).

In other words, in a given rolling one-year period, small caps give savers the largest potential bang for their buck and almost identical risk to the downside as large caps.

Bottom line: Large-cap stocks offer investors a smoother ride than small caps, but the market’s smallest stocks can help turbocharge your savings — with less risk over blue chips than you might think.

For an easy way to dive into small-cap investing, check out our flagship newsletter, True Alpha. Its model portfolio is full of tiny innovative companies that can take your retirement to the next level. Check out this information regarding Trump’s retirement blueprint, which includes details on how to join.

On the hunt,

Jonathan Rodriguez
Senior Analyst, Wall Street Daily

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