RICHMOND, Va., Aug. 7, 2013 /PRNewswire/ — 401kinvested.com, created by Lee Smith, is an informative website for asset allocation of mutual funds in an IRA and 401k Plan.
With 401k investments offering over 15 different mutual fund selections the process has become complex in choosing which funds to consistently be in. When looking at history as the best example of facts, it will show how all stock related mutual funds correlate the same path as the stock market on a yearly basis.
Helga Dietz, who is invested in mutual funds with American Funds states, "…how much should I contribute to my 401k and if I spread my money out over 12 different funds then I am bound to get lucky."
Statistical performances of mutual funds show that they all follow the same general direction year in and year out. Compare the charts in any retirement account over last 10 years of mutual funds whether they are small, medium, large or international funds and one can see the pattern is the same.
With this being the case, the best course of action is to equally distribute the percentage to the four basic major types of mutual funds. This would be:
1. Small Cap Funds: 25%
2. Medium Cap Funds: 25%
3. Large Cap Funds: 25%
4. International Funds: 25%
Over the course of 20 years, each type of fund will finish the year: 1st, 2nd, 3rd and 4th in that order when the stock market posts positive gains. They will rotate in the best performing sequence depending on where the growth came from in that business cycle.
Since the stock market cannot be predicted, the only way to make sure that at least 50% of one's value in a retirement account is in the top half is by having only the basic types split up in equal distribution as illustrated above.
In a previous interview with Lee Smith, he emphasized "having a conservative retirement approach is not enough; investors still need to know when the stock market is going in to a long decline to avoid losing a big part of their value. The solution to protecting mutual funds in retirement accounts when there is a stock market collapse is knowing when to switch from mutual funds to money market funds which is discussed on the website."
In the last 20 years when the S&P 500 Index has crossed below its 2 year moving average price, the stock market collapsed. In 2 out of the 3 times, the decline was 35% as in 2001 and 2008. The stock market as of today is now at it's highest point just like in 2000 and 2007.
About:
Lee Smith is a Stock Market Consultant for investors that have mutual funds in a 401k and IRA. To learn about stock market cycles and asset allocation for the best 401k funds, visit: www.401kinvested.com.
Contact:
Lee Smith
757-598-1734
Email