way to invest in mutual funds for a retirement
Cap Funds: 25%
2. Mid Cap Funds: 25%
3. Large Cap Funds: 25%
4. International Funds: 25%
Having the same percentage in each fund will ensure that you are equally invested in the four main types of mutual funds. At the end of the year, one of these four types will finish 1st, 2nd, 3rd and 4th. The order will be different every year depending on where the growth came from in that business cycle. Having a mix of funds that say blend would also give you the same types.
It's the only way to guarantee that half of your mutual fund investments are in the top 50% of the four main types of mutual funds every year. There are only these 4 types then it's separated by value, growth or blend. Your retirement plan list many funds to choose from and most are the same type but with a different company name for marketing purposes.
When the stock market goes up over a long period, all types of mutual funds will follow the same direction. Look at the charts of your funds over the previous years and you can see this for yourself. Once you realize that all your mutual funds in your retirement plan travel the same path every year, you will finally understand that by having several different types of funds makes no sense.
No matter what type of strategy is used, you would still need to know when the stock market trend is headed lower in order to protect your money in a declining market. This is done by transferring from under performing mutual funds to money market or bond funds in your retirement plan to avoid losing what you have made and contributed.
To find out when the stock market is going up or down is to look at the chart of the S&P 500 Index. The S&P 500 Index is known as the stock market because it covers only the 500 biggest companies in every industry, which are the same companies in your mutual funds. Compare your mutual funds to the stock market and you will see the same chart pattern.
market can not begin a long decline unless it goes below its 2 year
average first. The 2 year average is the average price over the
past 24 months and is the long term trend.
Red Line is the 2 year average of the Stock Market over the last 20 years
S&P 500 Index
Notice the stock market collapses in 2001, 2002 and 2008.
Transferring to money market funds would have saved your retirement account 30% in 2008. The same thing occurred in 2001 and 2002. When the market crashes, you don't want to wait 5 years to make your money back. The next stock market collapse could stay down for years because of our slow economic growth and national Government debt.
2 out of 3 times in the past, when the market fell under its 2 year average, there has been a major crash. Looking at the stock market chart will always tell you how your mutual funds are doing.
year average is the first warning sign that a stock market collapse
The only way to recoup every dollar you contributed is by waiting until the stock market gets back to its highest points when you were investing during the up years. If you do not do that then you will have wasted away years investing your hard earned money. This is the most important part financially.
My motto is that it's better to be safe than sorry, which is why I like a defensive strategy.
This is how I understand the stock market trend. The stock market is considered normal when it's above the 2 year average because this means the market as a whole is no longer dropping. Everything you read on this site is a fact and can be checked on the internet.
My free monthly stock market updates will allow you to know how the market is performing at all times. By switching to money market funds when the market is down then switching back to mutual funds when the market moves up can make you more money before you retire if your timing is right. The proof is in the chart. The stock market always repeats itself because when Business is good then more revenue is generated for our economy and vice versa when Business slows down.
Over the next 20 years, the market will continue to act like the previous 20 years. Since no one can predict the stock market, the only guide that an investor can use is by following the long term trend that shows the current direction.
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