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Investment Strategy For Mutual Funds

The one I have to share is considered the most easily understood because it is based on common sense. Give me five minutes of your time to read this to see my point.

The way to look at the stock market is by viewing its chart. To know if the market is performing bad is to see when the 1 year low was. The 1 year low means the stock market price is below the same price it was 1 year ago. It also means no money was made in your retirement account. As long as the market is above its 1 year low in the past 12 months it means you are no longer losing money in your retirement account.

To see if the stock market is stabilized is to look at its 1 year average. The 1 year average is the average price over the past 12 months. As long as the market is above its 1 year average this means the stock market is moving up and you are making money in your retirement account.

The chart shows how all the stocks of companies are performing. These stocks are in the mutual funds that you have in your retirement account. The companies in mutual funds are the same in the S&P 500 Index. The S&P 500 Index is a list of the 500 biggest companies in the world such as Walmart, Verizon, Sony, Exxon, Pepsi and hundreds more. By following the S&P 500 Index you can see what and how the overall market is doing. Other indexes are the Dow Jones Index but it only has 30 companies and the Nasdaq Index which has many small companies. These two Indexes follow the lead of S&P 500 Index because of its more established companies.

To understand how the market works is go to any website investment page and click on the ticker symbol for this index. Next is to set the time frame for months. When you look at the market over the past 12 months with the month to month price instead of the day to day price you will notice all the zig zags are gone. The zig zaging of price movements is what confuses people because all you see is the fluctuations in price.

This is caused from the buying and selling of stocks from millions of people. Setting the time frame of the S&P 500 Index chart to be viewed by month to month instead of day to day with straighten out all these lines you see in a chart. By doing this you will see straight lines being formed over the long term. It is like watching the market in slow motion because you are able to see when the market was up and down.

There are a lot of articles written on mutual fund strategies but none will tell you why or how the strategy works. The answer lies in the chart because this is physical evidence of what is currently happening now. These are real companies with their stock prices going up or down. When the majority of stock prices are going down, it is a clear indication that most investors are selling. The reason they are selling is because these companies are about to be earning less revenue than before.

The key to a successful retirement plan is to finish every year with a positive percentage rate. This means your mutual funds have to go up from January 1 to December 31.

Keys points are:

1. Mutual Funds are a collection of stocks from many companies.
2. The companies in mutual funds are the same in the S&P 500 Index.
3. The S&P 500 Index is considered the benchmark of the stock market because of all the big companies in it.
4. It has to be above its 1 year low because this means the stock market has stopped dropping.
5. It has to be above its 1 year average for the stock market to be moving up. The 1 year average is the average price over the past 12 months.
6. Look at the chart of this index using the month to month price instead of the day to day price. This will erase all the fluctuations and make straight lines.

To see how this works and receive addition information on protecting your retirement during stock market cycles please visit the website. I have articles on Forbes, MSN Money, Yahoo Finance, CBS Moneywatch, CNBC and Fox Business News.

You will find this is the best investment strategy for mutual funds because it is shows how to understand the stock market trend.

Lee Smith is a licensed business owner as a Stock Market Consultant Visit: Financial Advisor .

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