L-2030 Distribution and why you might want to watch individual funds.

I want to talk a little bit of why you want to watch individual indexes when it comes to the L-funds. They are designed to make sure you are invested in more than one vehicle so you cannot take big losses. An I actually admire that because some folks just do not want to deal with the day to day of their retirement account. Specially when they are young and their accounts are not worth much, yet. Problem is, you are now programming your brain to think the same way when account is worth a lot of money and then the next thing you know, we have a bad year or two and you see your account shrink and then you roll into the G because your afraid to lose a dime.

Today after the closing bell the International index pretty much got the hammer and for the week it is really getting the hammer. International down almost 2% for the week. In contrast Bonds, Small Cap, and S&P are all up for the week.

Now look above at what the current L-2030 has for the distribution of funds. The I-fund / International has almost 20% of your money and that money is getting the hammer. Second problem if you read my blog regularly you know the I-fund is in trouble and I have been out of it for over a month. The Bonds are starting to turn around but your portfolio only has 8% allocated, so it cannot keep up with the loses in the I-fund. The C and S are basically going sideways the last two weeks, so they are not hurting you at all. Then finally the G. It doesn't pay much, but it never loses money while other indexes will.

We all know the crap that is happening overseas in Cyprus and Europe with the Euro and that is going to continue for awhile. We know money in the stockmarket runs to Bonds and T-bills when things get ugly. So knowing all of this, why can't we look at the pie chart above and look at our charts and come up with a better plan. Jst tweak it a bit.

How about 25% G, 35% C, 15% S, 25% F, and 0% I. It is just a little adjustment but it more correctly reflects current market condition and gives more safety in Bonds and T-bills.

Just so you know, this week every L-fund is losing money because they have to much exposure to the International Index/I-fund. I made money so far this week because my distribution includes zero International index exposure.