If you’re like most people, you find the process of retirement planning somewhat intimidating. There are lots of numbers, calculations and assumptions to make before you can decide how much you need for to save each year, how much you’ll ultimately need to retire, how big a mortgage you can handle and what type of insurance to buy.
But there’s an easier way to plan that allows you to focus on some very clear and simple goals. Professional investors have for years been using financial ratios as shortcuts to evaluating the financial health of large companies. By looking at a few key ratios, investors can get a quick and comprehensive assessment of what sort of shape a company is in. The beauty of the ratios is that they compress mountains of data into one simple number that conveys a great deal of information.