(Untitled)

[pizzaboy]

My 401k is already up 17.5% this year - LOL. Too bad I didn't have more money in there, but still. My secret? Uber-high risk funds - emerging markets - international (77%) and American (23%).

Now I gotta roll it over into an IRA, so I hope I can find some funds that are at least that good.

Comments

[lissad63]

Hmm actually you should be able to do better... diversify more.

[pizzaboy]

huh? You'll need to explain that...diversification won't increase returns, it typically reduces risk while protecting returns (would increase the kurtosis of the bell curve).

[lissad63]

Ha ya I didn't word that at all like I intended!! Well the point is to save for the long run, not for the short term. So yes, you want to protect your returns but as is, when the market tanks again you're going down. What you're doing is just not a healthy long term strategy.

[pizzaboy]

Actually, more volatile investments are generally better in the long term, not the short term. They have higher variability in the short term. What this means is that older people will want to invest in things that generally have a lower return, but a lower risk and volatility as well. If you are 55 and about to retire, it wouldn't be wise to invest in something volatile, but younger people should have more risk in their portfolios, because there is a higher return over time.