Can TSP G fund be used as liability matching portfolio?

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runnergirl
Posts: 131
Joined: Thu Nov 04, 2010 1:15 pm

Can TSP G fund be used as liability matching portfolio?

Post by runnergirl »

Trying to decide whether to purchase a TIPS ladder in my Roth IRA or to rely on the TSP G fund for retirement (spanning mid-50's to 100). The TIPS rungs would be purchased yearly at auction in the Roth and held to maturity. Only the yield is so low I wonder if the G fund can substitute. I also have some no yield I Bonds and will keep purchasing these to the max annually.
Gauntlet
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Joined: Wed Nov 30, 2011 10:06 am

Re: Can TSP G fund be used as liability matching portfolio?

Post by Gauntlet »

Personally, I think the short answer is yes. It is not tied to inflation but here is the objective of the fund from TSP.gov: "The G Fund's investment objective is to produce a rate of return that is higher than inflation while avoiding exposure to credit (default) risk and market price fluctuations."

The G fund's yield will improve as interest rates go up but the principle won't go down (another great thing about the G Fund) and it has the added benefit of being easier to manage than a TIPs ladder. just my 2 cents.
Dr_McGarvey
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Joined: Tue Feb 23, 2010 7:31 pm

Re: Can TSP G fund be used as liability matching portfolio?

Post by Dr_McGarvey »

And let's not forget the incredibly cheap expense ratio associated with the TSP G-Fund (or any TSP Fund).
bayview
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Re: Can TSP G fund be used as liability matching portfolio?

Post by bayview »

That's what I'm using it for.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri
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grabiner
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Re: Can TSP G fund be used as liability matching portfolio?

Post by grabiner »

When you retire, you can convert your TSP to an inflation-adjusted annuity, which provides the liability-matching portfolio you need. I believe the TSP annuity rates are better than commercially available annuities.
Wiki David Grabiner
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