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This is pretty sound advice. I'm 23, work in finance, and know a number of people who basically do this.

The reason to speculate is very simple: you are compensated for higher risk with higher returns. This is why on average, US bonds return worse than US stocks, and Emerging Market stocks do better than US stocks. If you are 20 and not planning on retiring until your 60s, then you can afford to handle volatility in your retirement portfolio. Your goal should thus be to maximize your returns, not to worry about risk adjusted returns.

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thats a very good question.

i don't have access to the data, but since you do...why don't you run some backtests for various time horizons (5, 10, 20, 30, 40, 50 years) and see what the different between your employers' passive strategy and a very aggressive strategy would net on average during those time periods.

compare cumulative as well as risk adjusted returnsa nd report back [img]/images/graemlins/smile.gif[/img]

oh...i'll expect that report on my desk 9am monday.

Barron