Q. I am 64 years old with 12 years of federal service. I plan to retire when I am 66. I have done well in the L funds except in 2008. I have 80 percent in the 2020 fund and 20 percent in the 2030 fund. Should I put all of this money in the G Fund until the current financial crisis is over?
A. How you manage your account should depend upon your goals and circumstances, as well as a plan for future decision making. In general, market timing adds more risk to investment management than it avoids. It’s not part of my approach to investing, but maybe you know something that I, and most other investors, don’t. At least, you should answer the following questions before you proceed:
1. Does my current asset allocation support my short- and long-term goals with a minimum of risk?
2. Can I afford to endure short-term losses in my account without jeopardizing my long-term goals?
3. How long can I afford to sit in the G Fund before my long-term goals are threatened?
4. If I decide to move to the G Fund, and can’t afford to stay there for life, how will I decide when it’s time to get back in?
5. What will I do if my expectations about the investment markets are wrong?
These are all questions that can and must be answered to make this decision prudently.