Thrift Savings Plan

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Zeusy Zeus
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Thrift Savings Plan

Post by Zeusy Zeus » Mon Oct 16, 2017 9:11 pm

Hello everyone, I've been in the G fund for about 10 months now and have missed out on some serious gains thinking I was doing the right thing by being conservative. I'm tempted to dive back in but honestly need some knowledge on proper allocation. I was looking at buying a subscription online to a TSP advising website but most just seem sketchy to me. Does anyone have any advice they can share with me on allocation or maybe advisors to use? Thank you.

delamer
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Re: Thrift Savings Plan

Post by delamer » Mon Oct 16, 2017 9:23 pm

There are lots of "lazy portfolio" options that are outlined in the Bogleheads wiki. Most can be implemented with the funds in the TSP.

Zeusy Zeus
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Re: Thrift Savings Plan

Post by Zeusy Zeus » Mon Oct 16, 2017 9:35 pm

Yeah I see those "replicating the total stock market" articles but it still doesn't tell me what percentage is best and what not. It did however give me the basics stating S and C funds replicate the total stock index the best.

delamer
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Re: Thrift Savings Plan

Post by delamer » Mon Oct 16, 2017 9:42 pm


Zeusy Zeus
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Re: Thrift Savings Plan

Post by Zeusy Zeus » Mon Oct 16, 2017 9:57 pm

delamer wrote:
Mon Oct 16, 2017 9:42 pm
I meant these:

https://www.bogleheads.org/wiki/Lazy_portfolios
Still wouldn't know how to balance those for the TSP. I look at the 2 fund portfolio and I'm guessing 60% C fund 40% I fund. Also how do you get Admiral shares again? The expenses are much lower it has to do with the balance right?

Slacker
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Re: Thrift Savings Plan

Post by Slacker » Mon Oct 16, 2017 10:06 pm

From what little I read of your personal situation I recommend you simply pick one of the Lifecycle funds and don't look at the balance. Set your contributions to $692 per biweek if you can and let it ride. The higher the year, the more aggressive the portfolio (trying to get more growth).

There aren't any extra fees to use these "L funds" over the separate funds as far as I know. The L funds also auto rebalance for you and gradually adjust to a more conservative mix as the years go by.

Don't pay for a TSP "advisor" or "newsletter". TSP is too simple for that.

Also, just go ahead and move all your funds out of G fund and into the new L fund (or allocation if you do find an allocation you like better than an L fund).

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Jerry55
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Re: Thrift Savings Plan

Post by Jerry55 » Mon Oct 16, 2017 10:17 pm

I'd have to agree with Slacker above. Since you're relatively new, I'd go with an L Fund close to the year you plan on retiring.

Then, take a few years if need be, read, learn, then learn more. You have time on your hands.

I have a nephew who was in the G fund for the last 6 years, and I fell on the floor when he told me. He's in his mid 30's and was amazed when I compared notes on performance with him. (I went 100% C fund beginning late 2008, early 2009), and am currently 50/25/25 in C, S and I funds since 3/2015. I retired CSRS in 2012, and plan to stay there for maybe another 5-7 years as I just turned 62.

Take your time, pick an L fund, then learn. If you're uncomfortable doing so immediately, do so over a 6 month period. Change your bi-weekly investments and/or move G funds slowly. That's up to you...
Retired 12/19/2012 @ age 57 | Good Bye Tension, Hello Pension !!!

Arthur Digby Sellers
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Re: Thrift Savings Plan

Post by Arthur Digby Sellers » Mon Oct 16, 2017 10:20 pm

Based on your questions, I would recommend that you choose the TSP Lifecycle fund that corresponds to the year of your expected retirement (for example, I would choose the L2040 fund if I were expecting to retire between 2035 and 2045). The Lifecycle funds are designed by the Thrift Savings Board to provide an appropriate investment allocation based on your distance from retirement. The Lifecycle funds for investors whose retirements are far away are more aggressive; the funds for investors closer to retirement are more conservative.

Admiral shares are a Vanguard designation and they do not apply to the TSP. All TSP investors get the same low fees regardless of the size of their accounts.

**EDIT - I see that I was beaten to the punch by Slacker and Jerry. I agree with them that you should choose the appropriate L fund.

fundseeker
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Re: Thrift Savings Plan

Post by fundseeker » Mon Oct 16, 2017 10:31 pm

I agree with the L Funds until you learn more, but lets say you select one that is 70% stock. I do not recommend that you immediately transfer all of your TSP money into that fund in one transaction. If there is a big correction the day after, you might really regret having done that. My recommendation is dollar cost averaging, say 10% or 20% every two weeks or every month until you get it all in the L Fund you picked. Many many people regret having been too conservative in recent years, me included, but now is not the time to jump right in, IMHO. Good luck!

Arthur Digby Sellers
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Re: Thrift Savings Plan

Post by Arthur Digby Sellers » Mon Oct 16, 2017 10:40 pm

I disagree with dollar cost averaging into your chosen allocation because it is market timing and irrational. If you decide on an L fund with a 70% stock allocation, go ahead and move your funds to that allocation tomorrow.

If you are comfortable being invested in a 70% stock allocation six months from now, you should also be comfortable with that same allocation tomorrow. And if you are not comfortable with 70% stocks tomorrow, why would you be comfortable with that same allocation in six months?

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TimeRunner
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Re: Thrift Savings Plan

Post by TimeRunner » Mon Oct 16, 2017 10:46 pm

Move to the appropriate L fund, read some more, and don't feel bad about your short G Fund investment - you haven't LOST any money.
One cannot enlighten the unconscious. | Endurance athletes are the Bogleheads of sports. | "I like people - I just don't want to be around 'em." - Russell Gordy

daveydoo
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Re: Thrift Savings Plan

Post by daveydoo » Mon Oct 16, 2017 11:10 pm

I think everyone here is assuming that your TSP account holds all your assets. I can't tell from your post if that is correct.

fundseeker
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Re: Thrift Savings Plan

Post by fundseeker » Mon Oct 16, 2017 11:38 pm

Arthur Digby Sellers wrote:
Mon Oct 16, 2017 10:40 pm
I disagree with dollar cost averaging into your chosen allocation because it is market timing and irrational. If you decide on an L fund with a 70% stock allocation, go ahead and move your funds to that allocation tomorrow.

If you are comfortable being invested in a 70% stock allocation six months from now, you should also be comfortable with that same allocation tomorrow. And if you are not comfortable with 70% stocks tomorrow, why would you be comfortable with that same allocation in six months?
OP, this is commonly said in this forum, but it is not their money and they won't lose sleep if the market tanks. I am currently comfortable with my 60/40 allocation, but if I got a $100,000 windfall tomorrow for investing, I would not dump $60,000 in the market right now. I would be more comfortable adding the money over time, even if the market keeps rising. This is very rational!

Zeusy Zeus
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Re: Thrift Savings Plan

Post by Zeusy Zeus » Tue Oct 17, 2017 1:53 am

Fundseeker, Arthur, Timerunner, Jerry, Slacker, delamer thank you for the responses. The TSP aren't my only assets I own several equities and I have a roth IRA as well. The TSP is always something I had in the military and now in federal service just sitting there not really touching but after gaining some knowledge on the market I thought why not make some gains with the TSP as well. I like the L fund Idea but I also don't think you'll maximize your returns that way. I'm going to go all in on the C fund 100% in a couple months I might change it but right now I'm hoping there's still some gains to be made. I'm 20 years away from retirement so I have time on my side, only problem is I do have a good amount in there now and would hate to see the market tank (wouldn't we all) in the near future but I think now's the time to take risk. Really appreciate the input. www.tspallocation.com seem's like it provides some good information along with fedtrader.com those are the 2 free ones I've found that don't seem to be trying to scam folks.

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jadd806
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Re: Thrift Savings Plan

Post by jadd806 » Tue Oct 17, 2017 7:45 am

Zeusy Zeus wrote:
Tue Oct 17, 2017 1:53 am
Fundseeker, Arthur, Timerunner, Jerry, Slacker, delamer thank you for the responses. The TSP aren't my only assets I own several equities and I have a roth IRA as well. The TSP is always something I had in the military and now in federal service just sitting there not really touching but after gaining some knowledge on the market I thought why not make some gains with the TSP as well. I like the L fund Idea but I also don't think you'll maximize your returns that way. I'm going to go all in on the C fund 100% in a couple months I might change it but right now I'm hoping there's still some gains to be made. I'm 20 years away from retirement so I have time on my side, only problem is I do have a good amount in there now and would hate to see the market tank (wouldn't we all) in the near future but I think now's the time to take risk. Really appreciate the input. www.tspallocation.com seem's like it provides some good information along with fedtrader.com those are the 2 free ones I've found that don't seem to be trying to scam folks.
You don't want to "maximize your returns." A core tenet of the Bogleheads philosophy is accepting average returns. Unless you meant "maximize your returns for a given level of risk," but from the rest of your post it doesn't seem like it. Everything you wrote sounds like you're trying to time the market. Those two TSP allocation sites that you linked are written by market timers, for market timers. I would strongly urge you to not read those sites.

You went from the most conservative end of the spectrum to the most risky. Probably the only way to add more risk to your TSP is to go 100% S Fund. Are you trying to "make up" for the time that you spent out of the market? I will add another vote for you to invest in the L Fund. Make that change now, and use the resources on this site to determine why the L Fund is set up with the allocations that it is. Once you understand that, you will be ready to pick and choose your own funds in your TSP... and I imagine it'll come out pretty darn close to the L Fund for your retirement date.

Cunobelinus
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Re: Thrift Savings Plan

Post by Cunobelinus » Tue Oct 17, 2017 8:17 am

Zeusy Zeus,

We tend to have a fairly structured approach to financial planning here. What I believe several people above have been trying to impart to you is that an L-fund is a 90% solution both while you're learning more about what to do, or if you decide you don't want to take any more action on your investments.

There's a host of reading material available on the Wiki for getting started, including how you might want to establish an asset allocation across all of your accounts.

One of the best things you have going for you is time. You've got time to figure this out. Keeping your TSP in the G-fund is a safe option. Placing it all in an L-fund is a pretty safe option that may very well provide a better return than 100% G-fund. Don't rush into doing anything until you've taken the time to plan out what it is you want, what risk you can handle, and how you're best going to implement that plan.

Crisium
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Re: Thrift Savings Plan

Post by Crisium » Tue Oct 17, 2017 9:21 am

If you view all your retirement accounts as one, as you likely should, then the G Fund can make a great bond allocation. The principle never goes down, and while the yield fluctuates it is generally higher than a 7 year treasury note.

L funds are G fund heavy for their bond portion, which I like. They do get very conservative*, as they ultimately end up 20/80 stocks/bonds, with a 70/30 US/Int (Developed Large only for now).

You'll probably want bonds in your Roth and TSP for ease of re balancing, but once you figure out your total retirement account allocation I would recommend keeping the TSP bond portion all G Fund, or going an L fund since they are G heavy anyway.

*Based on Benjamin Graham optimal 25/75 - 75/25 range

delamer
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Re: Thrift Savings Plan

Post by delamer » Tue Oct 17, 2017 9:41 am

Zeusy Zeus wrote:
Mon Oct 16, 2017 9:57 pm
delamer wrote:
Mon Oct 16, 2017 9:42 pm
I meant these:

https://www.bogleheads.org/wiki/Lazy_portfolios
Still wouldn't know how to balance those for the TSP. I look at the 2 fund portfolio and I'm guessing 60% C fund 40% I fund. Also how do you get Admiral shares again? The expenses are much lower it has to do with the balance right?
You are correct about the 2 fund portfolio.

The TSP section in the wiki shows which Vanguard funds are equivalent to which TSP funds, if you want to add small cap or international from a slightly more complex lazy portfolio.

As something else pointed out, Admiral shares are only relevant at Vanguard.

Since you have other investments outside TSP, you should be looking at your allocation across all your assets. For instance, if your other assets are all in stocks, then the percentage of your TSP in stocks should be reduced to keep your overall allocation in line with what you decide.

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Earl Lemongrab
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Re: Thrift Savings Plan

Post by Earl Lemongrab » Tue Oct 17, 2017 11:30 am

fundseeker wrote:
Mon Oct 16, 2017 11:38 pm
OP, this is commonly said in this forum, but it is not their money and they won't lose sleep if the market tanks. I am currently comfortable with my 60/40 allocation, but if I got a $100,000 windfall tomorrow for investing, I would not dump $60,000 in the market right now. I would be more comfortable adding the money over time, even if the market keeps rising. This is very rational!
In that case, you should sell 100k in stocks in your tax-advantaged accounts and begin DCA back into the market. If you disagree, then you need to explain the difference.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

fundseeker
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Re: Thrift Savings Plan

Post by fundseeker » Tue Oct 17, 2017 7:16 pm

I have been pulling back, and I've gone from 60/40 to about 58/42. I am tempted to pull back further and may do so soon, and I call that rebalancing to my new allocation comfort level, but you can call it market timing or whatever. :) And, for months I have had my TSP contributions buying nothing but G Fund.

travelogue
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Re: Thrift Savings Plan

Post by travelogue » Tue Oct 17, 2017 9:15 pm

Agree with L funds. Your time horizon and desired risk to reward ratio will guide your choice of L target date(s). You have the option of both an inter fund transfer to rebalance what you already have saved and changing your allocation for future investments.

Expense ratios are *super* low for TSP. The only thing Vanguard has over TSP is a wider selection of funds. But no other program has the G fund, which is an awesome part of any TSP portfolio.

You could keep your current investments in G and put 100% into L2050, for example. This would dollar cost average you into equities and allow you to start capturing market gains while protecting what you already have from an equities market downturn. (And when there is a market downturn, you'll be buying stocks at a discount.)

This is a marathon, not a race.

Zeusy Zeus
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Re: Thrift Savings Plan

Post by Zeusy Zeus » Tue Oct 17, 2017 11:26 pm

Really appreciate the amount of feedback I've gotten on this topic I am convinced to move it to the L fund for the time being. I was trying to make up for lost ground but playing it safe is definitely the better way to go.

As for my question for Vanguard admiral shares, i remember reading bogleheads guide and it was referring to it but couldn't exactly remember how to get them. As I browse through the Wiki I'm noticing differences in the fees with admiral funds being less so I was curious how I can get into those.

And while I'm at it in my Roth IRA I'm invested in VTI, BND, and VXUS are those good choices?

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TimeRunner
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Re: Thrift Savings Plan

Post by TimeRunner » Tue Oct 17, 2017 11:39 pm

See Three Fund Lazy Portfolios re your Roth IRA. You've landed on excellent: https://www.bogleheads.org/wiki/Lazy_portfolios

Admiral funds just require more minimum investment than investor class, in return for which your costs are a bit lower.
One cannot enlighten the unconscious. | Endurance athletes are the Bogleheads of sports. | "I like people - I just don't want to be around 'em." - Russell Gordy

pxs1234
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Re: Thrift Savings Plan

Post by pxs1234 » Sun Nov 19, 2017 9:29 am

Several posters suggested to use a lifestyle fund until the OP knows more about asset allocation/general investing. I'm curious about the suggestion to wait until more knowledge is aquired. It seems to insinuate that a government employee who is more knowledgeable in investments would not have a lifecycle fund since they would know to do something else?

Barefoot
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Re: Thrift Savings Plan

Post by Barefoot » Sun Nov 19, 2017 11:13 am

pxs1234 wrote:
Sun Nov 19, 2017 9:29 am
Several posters suggested to use a lifestyle fund until the OP knows more about asset allocation/general investing. I'm curious about the suggestion to wait until more knowledge is aquired. It seems to insinuate that a government employee who is more knowledgeable in investments would not have a lifecycle fund since they would know to do something else?
The lifecycle fund doesn't know what other investments you have outside of TSP. A knowledgable person will consider the big picture and may or may not use the allocation that the lifecycle fund will give them.

delamer
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Re: Thrift Savings Plan

Post by delamer » Sun Nov 19, 2017 12:31 pm

pxs1234 wrote:
Sun Nov 19, 2017 9:29 am
Several posters suggested to use a lifestyle fund until the OP knows more about asset allocation/general investing. I'm curious about the suggestion to wait until more knowledge is aquired. It seems to insinuate that a government employee who is more knowledgeable in investments would not have a lifecycle fund since they would know to do something else?
No, it means that you have to make your choice in terms of your goals, non-TSP investments, risk level, and other factors once you are better-informed. Some well-informed people will decide a life cycle fund is a good choice; others will decide that it is not.

nclion
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Re: Thrift Savings Plan

Post by nclion » Thu Nov 23, 2017 4:07 pm

Zeusy Zeus wrote:
Mon Oct 16, 2017 9:11 pm
Hello everyone, I've been in the G fund for about 10 months now and have missed out on some serious gains thinking I was doing the right thing by being conservative. I'm tempted to dive back in but honestly need some knowledge on proper allocation. I was looking at buying a subscription online to a TSP advising website but most just seem sketchy to me. Does anyone have any advice they can share with me on allocation or maybe advisors to use? Thank you.
I am new to bogleheads, but I have been in the TSP for several years and I am nearing retirement. I am currently 75/22/3 in the CSI funds. Dave Ramsey recommends 80/10/10 or 60/20/20 in CSI funds. I Recommend reviewing the history of all the TSP funds to help make your decision. You can look at the L fund and see what pct of the GFCSI funds they are invested in. For me, they are too heavy in G,F, and I.

You don't state your age or how long you have before retiring so that may make a difference on your risk tolerance.

TSP website has lots of tools and fund history information. other websites specific to TSP are federal employees are TSPTalk, fedsmith, and federal soup.

As others have stated don't waste your money paying for some online advice, there is plenty of very good free advice out there.

Good luck on your investing strategy!

ColoRetiredGirl
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Re: Thrift Savings Plan

Post by ColoRetiredGirl » Thu Nov 23, 2017 9:49 pm

I am a newly retired government employee. At one point I was in the L fund a while back and it was like watching water boiling. It grew too slow! I do not know how long before you plan to retire. If it is a long time away, go with the C, S, and possibly the I funds. If it is within a couple of years, I will defer to the others on this site. With this said, I was “all in” the C Fund and tremendously increased my balance. I had been holding my breath but it worked out brilliantly. :dollar :moneybag

mxs
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Re: Thrift Savings Plan

Post by mxs » Thu Nov 23, 2017 10:38 pm

I am surprised no one has posted this yet...

viewtopic.php?f=1&t=6212

Format your question looking at your portfolio as a whole. You will want to be in some combination of G, C, S, and I funds likely. The L fund is probably the best quick fix, but your other investments will determine what is best for you.

motorcyclesarecool
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Re: Thrift Savings Plan

Post by motorcyclesarecool » Fri Nov 24, 2017 8:46 am

Zeusy Zeus wrote:
Tue Oct 17, 2017 1:53 am
www.tspallocation.com seem's like it provides some good information along with fedtrader.com those are the 2 free ones I've found that don't seem to be trying to scam folks.
A well intentioned individual can still be a moron. Don’t be blinded by their intentions. FedTrader is using so-called technical analysis to time the market. A while back, he thought he saw a positive indicator in the S&P500, so he went all-in on the S-fund (small caps) which doesn’t even track the S&P. Ignore the noise. Stay the course. Put it all in an L fund and don’t peek.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

Jb11
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Re: Thrift Savings Plan

Post by Jb11 » Fri Nov 24, 2017 9:03 am

A few months back some friends were recommending FedTrader for TSP allocation. I ran a quick comparison for the past three years of his suggested market timing moves and just sticking with the L 2040 fund, which I was invested in. L 2040 beat FedTrader by more than 3% per year over the 3 year period. So I agree with motorcyclesarecool: ignore the noise and stay the course.

nclion
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Re: Thrift Savings Plan

Post by nclion » Fri Nov 24, 2017 9:39 am

ColoRetiredGirl wrote:
Thu Nov 23, 2017 9:49 pm
I am a newly retired government employee. At one point I was in the L fund a while back and it was like watching water boiling. It grew too slow! I do not know how long before you plan to retire. If it is a long time away, go with the C, S, and possibly the I funds. If it is within a couple of years, I will defer to the others on this site. With this said, I was “all in” the C Fund and tremendously increased my balance. I had been holding my breath but it worked out brilliantly. :dollar :moneybag
I totally agree with C and S funds being the best long term choice. Frankly, I don't understand why so many are suggesting the L funds, I think they are fine to look at for a comparison, but make your decision on the long term performance of each fund independently and your own level of risk tolerance.

My biggest issue with L funds are that they average twice as much invested in the I fund as they do the S fund. This seems backwards to me, the I fund hasn't been close in matching the performance of the S fund historically. Of course the I Fund has outperformed all the other funds this year, but I am more interested in the long term, 5, 10 or even 20 years. below is the past 10 year performance of all the TSP funds. As you can see the more conservative the L fund the less return you get and none match the C or S funds for returns.


L Income L 2020 L 2030 L 2040 L 2050 G Fund F Fund C Fund S Fund I Fund
10-Year 3.73% 4.62% 5.14% 5.37% - 2.63% 4.59% 7.00% 8.13% 1.02%

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TimeRunner
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Re: Thrift Savings Plan

Post by TimeRunner » Fri Nov 24, 2017 10:57 am

nclion wrote:
Fri Nov 24, 2017 9:39 am
L Income L 2020 L 2030 L 2040 L 2050 G Fund F Fund C Fund S Fund I Fund
10-Year 3.73% 4.62% 5.14% 5.37% - 2.63% 4.59% 7.00% 8.13% 1.02%
Post format makes it look like G Fund was -2.63%. To be clear it's +2.63%. G Fund (or some mix of G and F) is a fine place to park your bond allocation in retirement while holding equities in external TIRA, RothIRA, and investment accounts. If you haven't looked at the BH Wiki, here's the link: https://www.bogleheads.org/wiki/Thrift_Savings_Plan
Note there will be changes to withdrawal options, etc, likely Spring 2018 as a result of TSP Modernization Act. Discussion here (recent posts): viewtopic.php?t=140180 , viewtopic.php?t=232543
Last edited by TimeRunner on Fri Nov 24, 2017 4:03 pm, edited 1 time in total.
One cannot enlighten the unconscious. | Endurance athletes are the Bogleheads of sports. | "I like people - I just don't want to be around 'em." - Russell Gordy

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grabiner
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Re: Thrift Savings Plan

Post by grabiner » Fri Nov 24, 2017 2:40 pm

nclion wrote:
Fri Nov 24, 2017 9:39 am
I totally agree with C and S funds being the best long term choice. Frankly, I don't understand why so many are suggesting the L funds, I think they are fine to look at for a comparison, but make your decision on the long term performance of each fund independently and your own level of risk tolerance.

My biggest issue with L funds are that they average twice as much invested in the I fund as they do the S fund.
This is not the right ratio to consider. The important ratio is US stock versus international stock. If you use the TSP, the I fund has all your international stock, while your US stock is split between C and S. The L funds have 30% of the stock in the I fund, which is a normal ratio.
This seems backwards to me, the I fund hasn't been close in matching the performance of the S fund historically.
Past performance is not an indication of future results. The issue of how much to invest in the I fund depends on future expectations of US versus foreign stock returns. There is no particular reason to expect stocks in any one country to have higher returns; if a country is doing well economically, investors will pay more for stock in that country. Foreign stock does have more risk, because of currency moves; if the Japanese yen buys fewer US dollars, your Japanese stock will lose value to you as a US investor, in addition to any gains or losses in the Japanese market. This is why 30% international stock is a common recommendation.
David Grabiner

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M_to_the_G
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Re: Thrift Savings Plan

Post by M_to_the_G » Sat Nov 25, 2017 8:47 am

I would move the TSP funds to -- and allocate future contributions to -- L2050. Read Bill Bernstein’s free pamphlet called “If You Can.” You can download it online. It includes an excellent reading list.
"It’s basically the plot of 'Charlie and the Chocolate Factory.' If you stick around, doing nothing, while everyone around you ****s up, you’re going to win big." - John Oliver

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