S and F funds


Q. I have been investing for 10 years in the G Fund with minimal gains. I recently put 50 percent toward the S Fund and 50 percent toward the C Fund. Was that a smart move? I have to retire in 10 years (mandatory 57 years old).

A. On its own, this asset allocation is not risk-efficient. It produces more risk than needed to produce its expected return. In addition, it is probably too risky for someone who expects to begin withdrawals in 10 years. Finally, I’m not sure that shifting everything you have into the stock market just as the market hits new record highs is the smartest move. In short, I don’t see anything “right” about this move.

If you don’t know how to manage an investment portfolio to meet your needs with a minimum of risk, closing your eyes and taking your hands off the wheel while you stomp on the gas is not the solution! As I’ve recommended about a thousand times in this blog over the years, a safer solution would be to put your money in the L Fund that most closely corresponds to your life expectancy.


About Author

Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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