Rethinking AA

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Topic Author
peddler12
Posts: 127
Joined: Sat Sep 03, 2011 10:01 pm

Rethinking AA

Post by peddler12 » Sun May 19, 2019 4:29 pm

My ROTH accounts for my wife and I are in the TR2015 fund. My wife's age is 61 and I would like to not touch her fund. My age is 58 and I'm thinking the TR2015 AA is to conservative for me if I plan to work until 2028. My TSP is in the L2030 fund and I sleep well at night. I'm just looking for some thoughts about AA at this stage. I certainly can just do nothing, but was think about moving the into the TR2025 fund. Historically that fund has done slightly better than TR2015, but really not by a whole lot. What thoughts would the board have with what I've shared here. My plan is simple. TR Funds. Just trying to rethink allocation at my age. Thanks a bunch.

Mike

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vineviz
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Re: Rethinking AA

Post by vineviz » Sun May 19, 2019 4:34 pm

It seems to me that if your goal is to retire in 2028 that. TR2025or TR2030 is more likely to have a more appropriate allocation than a TR2015 does.

It also seems to me that you and your wife should probably have the same allocation as each other.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Topic Author
peddler12
Posts: 127
Joined: Sat Sep 03, 2011 10:01 pm

Re: Rethinking AA

Post by peddler12 » Sun May 19, 2019 4:35 pm

Thank you.

retiredjg
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Re: Rethinking AA

Post by retiredjg » Sun May 19, 2019 4:36 pm

I don't see any problem moving to a target fund that holds the stock to bond ratio you are interested in.

Topic Author
peddler12
Posts: 127
Joined: Sat Sep 03, 2011 10:01 pm

Re: Rethinking AA

Post by peddler12 » Sun May 19, 2019 4:43 pm

Thank you Retiredig.

RadAudit
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Re: Rethinking AA

Post by RadAudit » Mon May 20, 2019 12:37 pm

peddler12 wrote:
Sun May 19, 2019 4:29 pm
was think about moving the into the TR2025 fund. Historically that fund has done slightly better than TR2015, but really not by a whole lot.
In all probability, TR2025 did better than TR2015 because its AA was more aggressive. This is just a guess but it is based on the idea that TR funds have AAs that are on a glide path to a more conservative allocation as they approach their target dates. TR2025 is ten years further back on the glide path than TR2015.

After some discussion, my DW switched at 68 from TR2015 to a conservative growth life strategy fund. TR2015 continued on to its eventual - and yet to be achieved - AA of 30 / 70 stocks / bonds, IIRC. The life strategy fund is staying at 40 / 60 and is doing slightly better, of course.

In figuring out my budget, I tried to figure out my portfolio's expected future return (Really big SWAG.) and my DW's portfolio's expected future return. Since my DW wants to keep on her path, I decided to be a little more aggressive in my portfolio to compensate and to, hopefully, make sure the combined portfolios would return enough to meet long term needs. (Another big SWAG.)

YMMV.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

bradpevans
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Re: Rethinking AA

Post by bradpevans » Mon May 20, 2019 12:43 pm

peddler12 wrote:
Sun May 19, 2019 4:29 pm
My ROTH accounts for my wife and I are in the TR2015 fund. My wife's age is 61 and I would like to not touch her fund. My age is 58 and I'm thinking the TR2015 AA is to conservative for me if I plan to work until 2028. My TSP is in the L2030 fund and I sleep well at night. I'm just looking for some thoughts about AA at this stage. I certainly can just do nothing, but was think about moving the into the TR2025 fund. Historically that fund has done slightly better than TR2015, but really not by a whole lot. What thoughts would the board have with what I've shared here. My plan is simple. TR Funds. Just trying to rethink allocation at my age. Thanks a bunch.

Mike
Since you are working 10 more years, what happens with more aggressive AA?
You take on more downside risk, but you will also be "buying low" should that happen.

Once you retire, you no longer keep buying, so you either do nothing in that case (don't need money)
or you are "selling low" because you do need the money.

In "good times" the higher equity allocation will be the "winner" ... but the market is not always "good times"

Changing AA is one thing. Changing it because one fund did better is perhaps a different matter

Topic Author
peddler12
Posts: 127
Joined: Sat Sep 03, 2011 10:01 pm

Re: Rethinking AA

Post by peddler12 » Mon May 20, 2019 1:45 pm

Thank you Brad. I'm glad you brought this to my attention, and I'm aware that when TR2015 drops .04 during the session that TR2025 will probably drop .07, and that in a recession the TR2015 will not decline as much as the TR2025 will decline. Thank you for your comments. I still feel TR2015 is too conservative for me and will proceed with the change in AA knowing these facts full well.

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