If I want to retire at 50, where do I invest my money?

IRAs and 401K's penalize you for retiring early. Do I just invest in the market and sell shares for income?

To retire at 50, you invest in any tax-deferred programs that you are eligible for (401ks, IRAs, Roth IRAs, etc.) to the legal maximum, and then put more away in non-tax-deferred 'normal' investment accounts. And in those accounts taken as a whole you diversify among US and foreign stocks, bonds, REITs, commodities, etc.

401ks and IRAs do not necessarily penalize you for retiring early. Check out the IRS rule 72t, particularly the list of exceptions under which no penalty tax is levied (72(t)(2)(A)(iv)). Essentially if you withdraw from your accounts in substantially equal periodic payments (SEPP) for the longer of five years, or until age 59陆, you are exempt from any extraordinary penalty. (For non-Roth IRAs and non-Roth 401ks, you do have to pay the normal tax that you didn't pay when you saved the money earlier.)

The calculation for the SEPP amounts you could withdraw can be based on one of a number of methods relating to your age and mortality.

Here's a calculator that will help you see what your SEPP amounts would look like:
http://www.fincalc.com/ret_11.asp?id=6

But if you do the SEPP technique under rule 72t, it would be very good to sit down with a financial advisor just to make sure you are following the rules correctly.

Surely Mutual fund wil be good..Investing in mutual fundis really a good idea.. Before investing learn more basics about it.. If you are first time investor means just go to the broker office & get the guide from them.we cannot predict the future in mutual fund .Just take a look at the below link to get free information regarding mutual fund.

Great you have some
We don't and we have worked hard all our lives and are now both over 54 and can not afford to retire until we are forced to.

If you have managed to get this far and have some money free at 50 to invest for your retirement - after paying to live, mortgage, bringing up a family etc-

Then I am not qualified to advise - I could with your advice to know where we went wrong?
So do what you think is best - you have obviously got it right so far so trust your own knowledge and judgment

If it was that easy, there would be no need for you to ask this question..

You should look into stocks paying dividends...
If you hold them in a regular brokerage account and do not choose to " re-invest" ( called DRIP programs)...then the dividends will be deposited in your " core" account, and you can withdraw from that as you see fit.
To get really good info on this type of investing, I recommend a visit to: http://www.investorvillage.com/
Register there ( all free) and visit the " income investing" boards... it is loaded with savy, informative investors who gladly share their knowledge and advice.
You can spread some investments so that quarterly payments come in every month...or seek some stocks that pay monthly dividends. The people at Investor Village know all the angles.

Yes.