Economic information and your investments
Want to manage your own money? Trying to grow your nest egg as fast as possible to retire early? Considering a strategy that will let you live off your investments now?
Whatever the situation, if you're interested in managing your own investments, what you need most is good information. Even if all you want to do is keep track of what the professional money managers are doing with the money in your mutual funds, you've got to have good information. If you are trying to actively trade stocks, options, mutual funds or other securities on a day trading basis, solid information becomes even more critical.
The best strategy for many people is "buy and hold," which basically consists of purchasing solid investments, usually mutual funds, on a regular basis without regard to market fluctuations and simply holding them for 20-40 years until retirement. So-called "market timing" is discouraged by most experts because of the difficulty in picking actual bottoms and peaks in market values.
But if you want to maximize returns so you don't have to wait 30 years to enjoy your money, buy and hold just won't cut it, unless you luck into buying a Microsoft in an IPO.
Fortunately, you don't need to pick the absolute bottom to add a lot to your bottom line. In the latest economic cycle, the stock market fell over 20% between last year and now. Buying as the downtrend started on a dollar cost averaging plan would have left your portfolio a little less than 20% short now. The market may still fall further, but buying now still beats buying in October of last year by double digits.
But following the economic indicators and daily economic news would have given you the information you needed to see that the market was heading into a downtrend so you could hold off your purchases.
