When taking more investment risk makes the most sense

I'm 30 and just starting to set aside money for retirement and other long-term goals. My father, who has a lot of investing experience, says I should buy mutual funds that invest in value and large-company stocks, the kinds that have done well for him. Does that strategy make sense for me, too?

Sure, but since you're still relatively young and your retirement funds have plenty of time to recover from dips in the market, you can afford to accept more risk in exchange for the chance to reap greater returns. So for now you may be better off focusing on funds that invest in small-company, growth, and international stocks. Over the short-term they'll be more volatile, meaning the value of your investment in them could rise and fall further and more rapidly than your father's holdings do. But if you can stomach those temporary ups and downs and resist the urge to sell when the market gets rocky, over the long haul you should be rewarded with greater growth than Dad. This strategy can be particularly beneficial for money you invest outside a tax-sheltered retirement plan, because then you can use any losses to offset your gains. And if you come out ahead overall, you'll pay a lower tax rate on the profit.