As many of us saw our retirement portfolios take a bath in 2008, the million dollar question is do we keep our retirement money in stocks and exchange traded funds (ETFs) or should we cash out and linger in a money fund?

We all want to reach retirement as soon as possible and build a large enough nest egg to sustain our current lifestyles.  So how do we do this?  When it comes to investing, the correct answer is to max out your 401(k) on a yearly basis, have a strategy, stay diversified, keep costs low and stay active with your portfolio.  ETFs are the way to go when it comes to cost efficiency, diversification and exposure to sectors.  After all, we are the ones that control the destiny of our portfolios.

But after the beating the markets took, many investors might feel tempted to shun stocks altogether and move to a money market fund or something similar, says Lara Cohn for Kiplinger. But is that really the solution?

Not so much. It’s nearly impossible to guess where you might be better off as an investor. Just because one particular asset class outperformed another in the last 10 years, it doesn’t mean that it will continue to do so for another 10.

Likewise, the buy-and hold strategy doesn’t work. It may have served investors 20 or 30 years ago, but over the last 10 years, the S&P 500 has done absolutely nothing. Will this situation repeat itself? Who knows? The only thing anyone knows for certain is that losing 10 years’ time can be very painful and costly. If an investor were to utilize the buy-and-hold strategy and bought the SPDRS (SPY) in 1999, today he would be in the hole.

For this reason, a tactical strategy might serve most investors better. We watch long-term trend lines to determine where and when we’re in and out of the markets.  This strategy is fairly simple to implement and follow – anyone can do it.  When an ETF is above its 200 day moving average, a buy signal is indicated and when it falls below the trend line, you sell and stash your money in cash.

As we all know, we don’t know what the future holds and our guess is as good as yours.  But one thing is for sure, having a strategy that you stick to and remaining actively involved in managing your portfolio is one way to help yourself become a more successful investor.

Kevin Grewal contributed to this article.

Tags: 401(k), Asset Class ETFs, ETF 101, Retirement, S&P 500, SPY, Trend Following