Giving financial advice to my boss

So as the work week was winding down and 30 minutes until I could go home, my manager asks me if I'm good with investments with regards to our 401(k) plan. It was kind of weird for her to approach me about finances. Even though she knows how much I make, I'm not sure how she knows why I would be good about that stuff. Maybe she heard from my co-workers. Anyways I agreed to help her out.

My manager was getting worried because nearly every investment offered in our 401(k) plan was negative for the year. I had to tell her not to worry because now she is able to buy shares of those investments for a discount. If we are in a recession, all we have to do is stick to a good asset allocation and continue to contribute no matter what the condition of the stock market was.

Principal Financial, the company that administers our 401(k), recently added target-date funds. The funds automatically change your asset allocation from high risk growth to low risk funds as you approach the target date of your retirement. I asked my manager when she planned to retire. She was aiming for 2017. Looking over the target-date funds, the target dates were spaced every decade. If she chose the 2010 target-date fund, her asset allocation would be too conservative from 2010 until 2017 while she continues to work. If she chose the 2020 target-date fund, her asset allocation might be slightly riskier for the first three years of retirement. To immediately address her needs, I suggested a 50-50 split of both the 2010 target-date fund and the 2020 target-date fund. The combined asset allocation of both target-date funds should be equivalent to a 2015 target-date fund.

The whole conversation took about 5 minutes. I was straight to the point and confident in my decision. When I met my manager at her desk, she had a printout of the performance of the 24 funds offered in our 401(k). I did not look at a single number. I do not need numbers to tell me how good a particular fund is. It would have been hard to individually choose the good funds from the list, since all year-to-date changes were negative. To get the best performance with as little risk as possible, it was more important to pick an asset allocation with risk that she can tolerate.

The only thing I could have done better was pick a better ratio of target-date funds. A 50/50 mix of 2010 and 2020 target-date funds would have an asset allocation equivalent to a 2020 target-date fund. I should have calculated a ratio that would have given her the asset allocation of a 2017 target-date fund. In that case, a 30/70 mix of 2010 and 2020 target-date funds would have given her the proper asset allocation.

My advise to my manager does not directly help me career wise yet. Especially since I gave her advise in the area of personal finance and that I work in the chemistry lab. She already knows my expertise with chemistry, computers, technology, and writing, that contribute to performing more than what is expected of my position. A knowledge in finance might be another area that adds value to my versatility of my position. It possibly might lead to a pay raise to keeping me around. Another possibility is getting promoted into a supervisor or managerial position because of my knowledge of finances, budgeting, and discount purchasing.