Someday you may want to retire and continue to live in the life style to which you have become accustomed. According to conventional wisdom you will need less money because you will have fewer expenses than when you had to go to the office every day. Maybe. Let's hope so.

Unfortunately, it doesn't always work out that way so you had better have saved enough cash to supplement the social security and pension plan income (if you have one).

My philosophy is to save with mutual funds as they are the safest way to invest in the stock market. There is one and only one basic criteria as to which mutual funds you should own. That fund or all those funds if you own more than one must be outperforming the S&P500 index (which is just an average) during the last 12 months.

Don't listen to the Wall Street gurus who tell you to buy a "good" fund and stick with it. The only good fund is one that is doing better than an average because you don't want your money doing a below average job. The hogwash you get from the great stock market "experts" is you need to look at how a fund has performed over the last 3, 5 or 10 years. Double hogwash. Ever hear the story about "what have you done for me lately"? It holds true for mutual funds.

Look up the big fund manager names on Wall Street. You will find that in the last 10 years all of them have had periods when they did not do an average job. You don't want to own any of their fund while this guy is going through a 'cold' period.

Every week the Investor's Business Daily paper publishes a list of various funds citing their performance over the past 36 months, 24 months, 12 months, 9 months, 6 months and 30 days. If you have the time and the right brokerage company you can pick the "hot" short term winners and switch from one to another at no commission charge. It does take time and effort.You will trade less frequently and you can get an excellent return on your money if you decide to go with the best performance over the last 12 months and you limit yourself to switching only if your fund falls out of the list..

When you are adding a small amount monthly to your IRA or 401k you will want to specify where those additional funds are to be invested. Always put them in the best performer at the time.

If you own more than one fund, say six, you should sell the weakest one and transfer your money from number six to number one. Sell the dog and invest in the top performer. Prune your portfolio monthly. Every fund manager will tell you this is too simplistic. It works. He is lying. Why? Because he is being paid on the amount of money in his fund and not upon the performance of the fund. It is called 'you buy, he holds'. It is a loser; he is a professional loser. Why should you be a loser too?

Review your funds' performance monthly and stay with the best ones. Retire early.

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