Q. I just started a federal career at age 31. I rolled over about $21,000 dollars into the S fund from prior retirement. Would it be better to use the L funds for growth which carry less risk, or seek the highest amount of returns in the S fund. I am huge risk-taker when it comes to investing, just trying to make informed decision before accepting all the risk of the S fund with no diversification.
A. Let’s see … I know that you’re 31, have about $21,000 in the S Fund, are a huge risk-taker and know little or nothing about managing a retirement investment portfolio. Sorry, but that’s not nearly enough information to figure out what’s best for you. It’s like you’ve told me that you’re driving a Ferrari somewhere in Iowa with 1/4 of a tank of gas and asking which way you should turn the wheel. I can tell you that your one-fund portfolio takes more risk than needed for the expected return it produces, and that it could be made more risk-efficient through diversification.