Q. I have all of my funds allocated to the G Fund and would like to diversify my account. I changed my allocation to 100 percent G Fund in June 2016 when markets were dropping, with the intention of rediversifying at some point. With the markets continued rise, I am afraid now that I will lose money if I tried to convert now since I would be buying in at a higher amount. The loss from the conversion may be worse than the gain of increased returns from the other investment options. What are your recommendations?
A. The good news is: You avoided a lot of risk in the G Fund. The bad news is: You missed out on a lot of return in the G Fund. You have clearly demonstrated the risk of market timing. It was easy to decide to get out. It’s much harder to decide when to get back in. If you didn’t need the return, then avoiding the risk was the smart thing to do. If you missed out on return that you will need later, then it was a mistake. I recommend that you stop this guessing game and put your portfolio into the right investment allocation as soon as possible and keep it in the right allocation all the time! The right investment allocation is the one that supports your lifetime goals for the money with the minimum possible risk. If you don’t know what the right allocation is for your portfolio, you should find someone trustworthy to help you figure it out (not a salesperson).