imported post
bklyngal,
Your instincts are correct. Diversify! You were lucky to be in the best performing fund during the 1990s. Congrats! However, you'd be smart to diversify, i.e. not put all of your eggs in one basket. If the S Fund is the best performing fund over the next 17-40 years, you'll be in great shape. However, that's a stretch, and I certainly wouldn't bet my retirement on it. Although the S Fund has historicallyprovided a higher return, it also is more risky than the C Fund or the G/F Funds - no free lunch! Higher returns come at the expense of higher risk. Over the next 17 years, the best performing fund could easily be the C Fund or the I Fund, not the S Fund. Even bonds have outperformed equities for long periods of time in the past.
You might want to do some reading on the subject. I highly recommend A Random Walk Down Wall Street by Burton G. Malkiel.It discusses all of the investment approaches, i.e. market timing, technical analysis, Modern Portfolio Theory (MPT), Arbitrage Pricing Theory (APT), buy-and-hold,dollar cost averaging, rebalancing, and provides valuable information on asset allocation. However, don't just believe me, it's on every investment professional's "must read' list.
Finally, you need to devise a strategy that meets your investment goals and risk tolerance. The fact that you have a good family incomeand a rather longinvestment horizonmeans you can incur more risk. On the other hand, it also might mean that you don't need to incur more risk to meet your investment goals, i.e. you can employ a more conservative, less riskystrategy.
There's no guarantee that stocks will outperform bonds or that small stocks (S Fund) or foreign stocks (I Fund) will outperform the S&P 500. Diversify!
Good luck!