Q. My co-worker told me she moved all of her funds to the G Fund. She has 16 years in service and is 45 years old. How will she know when it is time to move these funds back into more aggressive funds? I was giving this some thought for myself but did not know how to decide when would be the right time to move these funds back to more aggressive funds. I’m staying put for now since I don’t plan on taking anything out for another 10 years or more.
A. You should ask her this question. Portfolio management is the process of evaluating and acting on a long series of many decisions. Ideally, this process will move you from where you are now, Point A, to your ultimate goal, Point B, while passing through a series of intermediate points along the way. The quality of each decision is dependent upon the quality of all of the others. This means that to evaluate the quality of a particular decision, such as moving everything to the G Fund, you not only have to know something about the investor’s lifetime goals but also something about how they will make the various investment decisions they’ll face in the future — like when to move out of the G Fund. Making an investment decision outside of the greater context is nothing more than blindly guessing and hoping for good luck.