These mutual funds are a collection of many companies such Walmart, Exxon, Verizon, Apple and even Google. There are hundreds of companies in each mutual fund. The word mutual fund means that the stocks of these companies are bought and sold in the stock market. The word stock means it is a certificate of the company. Each company issues millions of these certificates. Yes, they are just paper but it a legal document of ownership. You have to own more than 50% of these stocks to have any power of a company.
In your case since you are employed with a company, you do not have to worry about controlling a company. The employee of a company with a 401k plan is just worried about not losing money in their retirement account. When you get your statement every three months you need to look at it and see the change in value. The mutual fund names on your statement can be viewed on the website from the company that offers them. This way you get a better understanding of what kind of companies are in the fund.
I have done this since 1994 so I do have a clue on what I am talking about. There is no reason to feel like this is the most complicated thing in the world. Mutual Funds are a group of stocks from many companies. You only have to worry about one fund and not one stock. Investing in stocks is too risky because it is to hard to find the one company that doubles in price.
To pick the best mutual funds in your retirement account is to look at ones that are performing the best over the past 6 months. These are the leaders at the end of 12 months. Become familiar with the S&P 500 Index because this considered the bench mark for the over all market. The S&P 500 Index consist of 500 biggest companies in the world. The same companies in your mutual funds are in this index.
75% of mutual fund managers do not beat this index on a long term basis. The S&P 500 Index is known as the stock market because of its more established companies. Other indexes such as the Dow Jones and Nasdaq mimic the direction of the S&P 500. If you want to save the value in your retirement account then you need to become active. There are countless strategies that offer advice. I have the best one I consider or else I would not have wrote this. If you are serious about protecting your retirement funds then it would be in your best interest to read the information I provide on my website. No one else will tell you the way it really is except me. Know the understanding for a bear market.
When you look at any stock chart, the time frame has to be set on month to month and not day to day. The by month period will eliminate all the zig zags you see in the chart. This should come by as common sense and needs no explanation. Believe it or not, this is the first step to understanding the stock market. Look at any chart over the past 12 months using the month to month price and not the day to day price and you will see the stock market trend.
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