What’s in your TSP?

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tomwood
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What’s in your TSP?

Post by tomwood » Sat Nov 09, 2019 7:27 am

I’m new to the TSP. Do people who have outside retirement accounts invest differently inside the TSP because of the outside accounts or do they try to have similar investments, such as the 3 fund portfolio, in all accounts?
And are people on this forum, who have a TSP, more likely to use the L Fund over people who only have a life cycle fund available in their 401k with likely higher fees?
Any and all TSP advice is welcomed.

Buford T Justice
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Re: What’s in your TSP?

Post by Buford T Justice » Sat Nov 09, 2019 9:37 am

My TSP and Outside investments are similarly invested but I weight my IRA's more toward Emerging Markets and International Bonds because the TSP has neither... I think the TSP includes Yankee bonds which are bonds issued by a foreign entity, such as a bank or company, but issued and traded in the United States and denominated in U.S. dollars.

stan1
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Re: What’s in your TSP?

Post by stan1 » Sat Nov 09, 2019 9:47 am

We do not use the L funds because we have many other accounts including Roth IRAs, Traditional IRAs, inherited IRAs, and taxable accounts. We do not use the I Fund because we don't need a developed market large cap international fund in our asset allocation (we have total international, emerging markets, and international small in other accounts). We do not use the F fund because we have bonds in other accounts. We do not use the S fund to overweight companies outside the S&P 500 (we use small cap value for that which is not offered at the TSP and hold it in other accounts). So for us we use the C and S fund to replicate Total Stock Market at a fixed 80/20 ratio (it changes but that's what we use and don't sweat the minor details) and the G Fund as part of our fixed income allocation.

You should use the funds you need to build your asset allocation.

Helo80
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Re: What’s in your TSP?

Post by Helo80 » Sat Nov 09, 2019 10:08 am

I personally keep contributions it at 60/20/20 for C/S/I. I have not bothered to re balance.

I tend to keep IRAs at 100% TSM (or close to).

Fishing50
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Re: What’s in your TSP?

Post by Fishing50 » Sat Nov 09, 2019 10:25 am

Our TSP is 56% G Fund, which is our entire bond allocation.
Roth IRA is 100% equity including 5% emerging market
Taxable is 100% equities
It's perfectly legal, go ask the IRS, they'll say the same thing. I actually feel stupid telling you this, I'm sure you would've investigated the matter yourself. Andy Dufresne

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oldcomputerguy
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Re: What’s in your TSP?

Post by oldcomputerguy » Sat Nov 09, 2019 10:35 am

This topic is now in the Personal Investments forum.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

delamer
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Re: What’s in your TSP?

Post by delamer » Sat Nov 09, 2019 11:26 am

We have determined an overall allocation for our retirement savings. We choose the best funds (low cost, index) within each retirement account to achieve that overall allocation.

So my TSP is 13% G fund, 47% I fund, and 40% S fund.

No one would recommend that allocation if the TSP was our only retirement account. But it makes sense in the context of our total retirement savings and the options within my husband’s 401(k) and our IRAs.

Iorek
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Re: What’s in your TSP?

Post by Iorek » Sat Nov 09, 2019 11:43 am

I use the L funds (50/50 contributions split between 2). TSP is the large majority of our retirement funds and there are pros and cons to different asset allocations in different vehicles so I don’t worry too much about balancing across accounts, plus I don’t want to be responsible for reallocating assets periodically because I have no faith I would do it well.

Topic Author
tomwood
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Re: What’s in your TSP?

Post by tomwood » Sat Nov 09, 2019 3:36 pm

oldcomputerguy wrote:
Sat Nov 09, 2019 10:35 am
This topic is now in the Personal Investments forum.
Thank you for the correction

GmanJeff
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Re: What’s in your TSP?

Post by GmanJeff » Sat Nov 09, 2019 4:27 pm

100% C Fund since inception and into retirement. Outside investments are used to balance out to my target asset allocation.

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Jerry55
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Re: What’s in your TSP?

Post by Jerry55 » Sat Nov 09, 2019 5:48 pm

I'm retired and my CSRS pension is enough, so I'm more aggressive, at least in my TSP. 80/10/10 in C, S and I (approx 60% of my investments)
I converted 2 mutual funds into a ROTH IRA via the VCP so that is my sleep well Vanguard Wellesley (~20%), Wellington Taxable (~10%) and rolling 26 week T-Bills + Online savings for Emergencies (~10%).

I'll never leave the TSP.
Retired CSRS on 12/19/2012 @ age 57 w/39 years | Good Bye Tension, Hello Pension !!!

kelvan80
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Re: What’s in your TSP?

Post by kelvan80 » Sat Nov 09, 2019 5:49 pm

We use the G fund for our bond portion with some C and S (70:30 split). My spouse and I both have Roth IRAs, one holds total stock and the other total international. I use an excel sheet to tell me if I need to rebalance, I can either transfer more into the G fund or other way around. I haven't had to worry about what to do if international takes off because it hasn't in the last 10 years. If you're military read anything by Doug Nordman and Kate Horrell and of course the Wiki has a TSP page.

Chrono Triggered
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Re: What’s in your TSP?

Post by Chrono Triggered » Sat Nov 09, 2019 6:04 pm

50/50 C and I fund. I tilt to small in domestic and international in my other accounts.

MnD
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Re: What’s in your TSP?

Post by MnD » Sat Nov 09, 2019 6:10 pm

27% C, 13% S, 30% I and 30% G.
Our other accounts are mainly broad index funds but have hefty positions and tilts to emerging markets and small cap international to balance the fact that the I fund does not cover these portions of international. Also an active global bond fund (DODLX) which pairs well with TSP G in my opinion.
Overall we are 70/30, global market cap on equity and TSP G and DODLX on fixed income.
70/30 AA, Global market cap equity. Rebalance if FI <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.

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tomwood
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Re: What’s in your TSP?

Post by tomwood » Sat Nov 09, 2019 8:33 pm

Iorek wrote:
Sat Nov 09, 2019 11:43 am
I use the L funds (50/50 contributions split between 2). TSP is the large majority of our retirement funds and there are pros and cons to different asset allocations in different vehicles so I don’t worry too much about balancing across accounts, plus I don’t want to be responsible for reallocating assets periodically because I have no faith I would do it well.
You split between two different retirement years of the L Funds? Why do you do that?

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tomwood
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Re: What’s in your TSP?

Post by tomwood » Sat Nov 09, 2019 8:35 pm

Helo80 wrote:
Sat Nov 09, 2019 10:08 am
I personally keep contributions it at 60/20/20 for C/S/I. I have not bothered to re balance.

I tend to keep IRAs at 100% TSM (or close to).
It’s interesting to see only one person, so far, using the L Fund. As the ER is quite low, what’s the negative to the L Funds? Is it more optimal to recreate the 3 fund portfolio inside the TSP? Are there any benefits to the L fund?

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Jerry55
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Re: What’s in your TSP?

Post by Jerry55 » Sat Nov 09, 2019 8:46 pm

tomwood wrote:
Sat Nov 09, 2019 8:35 pm
Are there any benefits to the L fund?
In short, I can only answer for what I'm familiar with. I've been investing since 1984, and the only fund available to CSRS employees in the beginning when it all started was the G fund ONLY. So I had to go outside, because the TSP wasn't around when I began, and I certainly didn't want to be limited to only the G Fund, hence I began with 20th Century, JANUS and STRONG Funds in Wisconsin, but branched out from there.

FAST FORWARD to 2014, when I spoke with my nephew who started working with the Dept of the Navy in MD, who was solely in the G fund, because his co-workers told him to stay safe and stay in G. He was in it for almost 5 years, and I asked him...

"If we both have 100K and the G fund earns 1.8% and the C fund earned, that year, about about 28%, would you rather have 102K or 128K"

Well, that totally answered his questions, but he didn't understand anything about investing at ALL !
I told him to pick an L fund that's close to his retirement date, and take the next 10 years to pick up a book and LEARN.

He's in the L2050 fund now, and loves it.....I just hope he's reading more about investing.
Retired CSRS on 12/19/2012 @ age 57 w/39 years | Good Bye Tension, Hello Pension !!!

rkhusky
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Re: What’s in your TSP?

Post by rkhusky » Sat Nov 09, 2019 10:53 pm

tomwood wrote:
Sat Nov 09, 2019 8:35 pm
It’s interesting to see only one person, so far, using the L Fund. As the ER is quite low, what’s the negative to the L Funds? Is it more optimal to recreate the 3 fund portfolio inside the TSP? Are there any benefits to the L fund?
Bogleheads like to mess around with their investments. The L Funds are too boring - you can't tinker. Bogleheads also like to believe that their custom asset allocation will out-perform the L Funds.

Iorek
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Re: What’s in your TSP?

Post by Iorek » Sat Nov 09, 2019 11:46 pm

tomwood wrote:
Sat Nov 09, 2019 8:33 pm
Iorek wrote:
Sat Nov 09, 2019 11:43 am
I use the L funds (50/50 contributions split between 2). TSP is the large majority of our retirement funds and there are pros and cons to different asset allocations in different vehicles so I don’t worry too much about balancing across accounts, plus I don’t want to be responsible for reallocating assets periodically because I have no faith I would do it well.
You split between two different retirement years of the L Funds? Why do you do that?
I guess because I want to be a little more aggressive on equities than one but not quite as aggressive as the other.

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Taz
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Re: What’s in your TSP?

Post by Taz » Sun Nov 10, 2019 7:32 am

We have outside investments as well as TSP and now use the TSP for bonds.
G fund - 67%; F fund = 33%.
The destination matters.

SteveJones
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Re: What’s in your TSP?

Post by SteveJones » Sun Nov 10, 2019 10:20 am

If you are in a position to receive a pension I wouldn't worry as much about having a bond fund in your portfolio. The pension acts as your buffer when the market is down. As a mix of Bogleheads and Dave Ramsey I'm a C, S, I guy. 80/10/10.

MichDad
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Re: What’s in your TSP?

Post by MichDad » Sun Nov 10, 2019 11:08 am

I began investing in the TSP in 1987 as a transferee into the FERS pension system. For the first year or so, all TSP participants were limited to the G Fund. As soon as other funds opened up, I left the G Fund for the C, S, and I Funds. I’ve never owned the L or F Funds. I remained solely in the C, S, and I Funds until 2017, when I moved over $1 million into the G Fund. I retired on March 31, 2018, at age 62, with a TSP balance of over $1.8 million. Over $200,000 of that total was in the Roth TSP.

I made no changes until after the Additional Withdrawal Options rule became effective in September 2019. In early October, I transferred my entire Roth TSP balance to Merrill Edge. They’re paying me a $1,000 bonus for that transfer. The TSP rules require participants to wait a minimum of 30 days before making new transfers. A couple of days ago, I transferred ~ $675,000 from the TSP to Schwab. They’ll pay me a $1,200 bonus for that transfer.

I’ve kept $1,040,000 in the G Fund; I have no other TSP holdings. In another thirty days, I’ll submit another withdrawal form to the TSP. This time, I’ll begin making equal monthly withdrawals to my credit union checking account to help finance our ongoing expenses. My G Fund will easily last us well beyond the time I turn age 70 and will begin to collect my maximum Social Security benefits based on 35 years of high earnings.

Outside the TSP my wife and I have very significant Roth IRA, tIRA, and taxable accounts. All of those accounts are invested in US and international equities. We have no bond holdings other than my G Fund. We’re making substantial Roth conversions each year so that we’ll keep our Required Minimum Distributions as low as possible after I turn age 70.5.

What worked for me was to invest steadily into only US and international equities for my entire working career. It wasn’t until shortly before I retired that I put any investments into bonds (the G Fund in 2017). I held firm through some serious downturns, always continuing to invest into equities; never faltering or wavering. Perhaps it was pure luck but I felt it was a calculated risk. I admit that having a FERS pension and Social Security to fall back on helped boost my confidence.

I’ve posted my TSP account progression here:

viewtopic.php?f=2&t=163802#p4777349

MichDad
Last edited by MichDad on Sun Nov 10, 2019 11:11 am, edited 1 time in total.

Helo80
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Re: What’s in your TSP?

Post by Helo80 » Sun Nov 10, 2019 11:09 am

tomwood wrote:
Sat Nov 09, 2019 8:35 pm
Helo80 wrote:
Sat Nov 09, 2019 10:08 am
I personally keep contributions it at 60/20/20 for C/S/I. I have not bothered to re balance.

I tend to keep IRAs at 100% TSM (or close to).
It’s interesting to see only one person, so far, using the L Fund. As the ER is quite low, what’s the negative to the L Funds? Is it more optimal to recreate the 3 fund portfolio inside the TSP? Are there any benefits to the L fund?

The L fund is a fine fund for people that want the ultimate set and forget and never rebalance. However, it's criticisms are the decade long increments and more conservative investing approach.

Helo80
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Re: What’s in your TSP?

Post by Helo80 » Sun Nov 10, 2019 11:13 am

rkhusky wrote:
Sat Nov 09, 2019 10:53 pm
tomwood wrote:
Sat Nov 09, 2019 8:35 pm
It’s interesting to see only one person, so far, using the L Fund. As the ER is quite low, what’s the negative to the L Funds? Is it more optimal to recreate the 3 fund portfolio inside the TSP? Are there any benefits to the L fund?
Bogleheads like to mess around with their investments. The L Funds are too boring - you can't tinker. Bogleheads also like to believe that their custom asset allocation will out-perform the L Funds.

LOL --- Yes, my custom allocation will likely outperform the L fund long-term because I don't have the dead weight of the F-fund and G-fund in it. Though, I can understand why the L-fund puts F/G in there.... to help the steady the ship in market downturns.... as the entire federal workforce is no better or worse at managing finances than the private sector. When the markets go down, people panic and whine about losing their entire retirements.

I think that the entire TSP website and funds offered are boring, but it works well enough that I still use it.

Helo80
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Re: What’s in your TSP?

Post by Helo80 » Sun Nov 10, 2019 11:14 am

MichDad wrote:
Sun Nov 10, 2019 11:08 am
I’ve posted my TSP account progression here:

viewtopic.php?f=2&t=163802#p4777349

MichDad

Thank you for sharing!

kelvan80
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Re: What’s in your TSP?

Post by kelvan80 » Sun Nov 10, 2019 12:36 pm

[/quote]

It’s interesting to see only one person, so far, using the L Fund. As the ER is quite low, what’s the negative to the L Funds? Is it more optimal to recreate the 3 fund portfolio inside the TSP? Are there any benefits to the L fund?
[/quote]

We have assets outside of the TSP including two Roth IRAs, CDs earning 2.75 to 3% and four 529 plans. If I need to rebalance inside the TSP because of growth in the other accounts I cannot do that with the L fund because it's all-encompassing.

renegade06
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Re: What’s in your TSP?

Post by renegade06 » Sun Nov 10, 2019 7:40 pm

I still have trouble understanding whether or not G or F is better.... and whether it's ok to split my bond portion between the two. I know that G has almost no risk and a slightly lower return. I'd appreciate any thoughts people have on the G vs F.

I keep my bonds in the TSP and am 100% equities outside of TSP.

Topic Author
tomwood
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Re: What’s in your TSP?

Post by tomwood » Sun Nov 10, 2019 9:16 pm

renegade06 wrote:
Sun Nov 10, 2019 7:40 pm
I still have trouble understanding whether or not G or F is better.... and whether it's ok to split my bond portion between the two. I know that G has almost no risk and a slightly lower return. I'd appreciate any thoughts people have on the G vs F.

I keep my bonds in the TSP and am 100% equities outside of TSP.
Great question. I’d like to know the answer to this too

WhaleMan
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Re: What’s in your TSP?

Post by WhaleMan » Sun Nov 10, 2019 9:17 pm

I use the L funds. The AA allocation is reasonable and the rebalancing is automatic.

Since the ER are no different, I purposely use the TSP target date funds and this frees my time to focus on my other investments.

Helo80
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Re: What’s in your TSP?

Post by Helo80 » Sun Nov 10, 2019 9:19 pm

renegade06 wrote:
Sun Nov 10, 2019 7:40 pm
I still have trouble understanding whether or not G or F is better.... and whether it's ok to split my bond portion between the two. I know that G has almost no risk and a slightly lower return. I'd appreciate any thoughts people have on the G vs F.

I keep my bonds in the TSP and am 100% equities outside of TSP.
The F-Fund is your bond market index. It offers a slightly higher return, but more risk.

The G-fund is effectively government securities and a very unique and special fund in that it's Government Securities and will slightly outpace inflation. There is no chance of market loss, and funds similar to it are unavailable outside of TSP.

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calmaniac
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Re: What’s in your TSP?

Post by calmaniac » Sun Nov 10, 2019 9:48 pm

100% of my TSP is invested in the G fund. I use it a part of my bond allocation.

I'm not a big fan of bonds for young people and was 100% equities until past age 55. But now that I am "of that age" (61) and have shifted my asset allocation, the G Fund serves me well and provides a unique bond investment with reasonable intermediate-long-term bond rates but little downside when interest rates increase.

From the TSP web site, https://www.tsp.gov/InvestmentFunds/Fun ... nce_G.html
"As a result, participants who invest in the G Fund are rewarded with a long-term rate on what is essentially a short-term security. Generally, long-term interest rates are higher than short-term rates."

From the TSPFolio web site, https://www.tspfolio.com/blog/32/The_ou ... and_G_Fund
"Enter the TSP G Fund. Sure, its returns over the past year have been an anemic 1.4 percent. But payment of G Fund principal and interest is guaranteed by the U.S. government. Which is an extremely unusual and valuable feature that many will hopefully learn to appreciate in the decades ahead of us."

Bogle heads G Fund discussions (or just search Bogleheads for "G fund"):
https://www.bogleheads.org/wiki/G_Fund
viewtopic.php?t=238418
viewtopic.php?t=250598

In fact, it is such a good deal that Congress is perennially threatening to lower the rates on the G Fund:
https://www.govexec.com/pay-benefits/20 ... ss/141591/
https://www.fedweek.com/tsp/whats-in-st ... p-in-2019/

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calmaniac
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Re: What’s in your TSP?

Post by calmaniac » Sun Nov 10, 2019 9:56 pm

tomwood wrote:
Sun Nov 10, 2019 9:16 pm
renegade06 wrote:
Sun Nov 10, 2019 7:40 pm
I still have trouble understanding whether or not G or F is better.... and whether it's ok to split my bond portion between the two. I know that G has almost no risk and a slightly lower return. I'd appreciate any thoughts people have on the G vs F.

I keep my bonds in the TSP and am 100% equities outside of TSP.
Great question. I’d like to know the answer to this too
Another thought. As I noted above, I'm not a big fan of bonds, but know I need bonds to counter the risk of losses due to equities. The G Fund provides me a rock-solid bond fund with zero chance of loss of value. That stability allows me to allocate a little less to bonds. YMMV.

tigermilk
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Re: What’s in your TSP?

Post by tigermilk » Mon Nov 11, 2019 7:44 am

I am about 6.5 years out from my MRA, and don't know if I will punch out then or wait a few years. Up until 2016, I was all C, S, and I in varying percentages (mostly C). Today I sit at around 35% in each of C and S, 15% in I, and the remainder split between G and F. All new paycheck contributions are going in C (35%), S (40%), and I (25%). I slightly increased bonds a few months back since the steam has to be running out on this decade plus run, so a bit of a defensive posture to pocket gains and have some cash available for that potential dip. Just in the last period I started putting my portion into the Roth TSP. I hit 2 commas in my TSP this year and realized that with my planned retirement withdrawal plan that I would likely have away too much in there by the time MRAs come around. Currently in the 22% tax bracket, and between pension and all other revenue streams, will stay in that bracket. So moving to the Roth is a hedge against returning to higher tax brackets (not based on income, but rather if winds change politically) in the future.

My outside accounts are e8ther all equity (our Roths), a mixture of equity and money market (brokerage, with money market due to wanting to use some of the $ short term), or equity/bond (HSA, and the only reason for a bond portion was that this year I had a sizable dental bill not covered by GEHA). Prior to this year, the non-TSP accounts were all equity. Turned 50 this year, and total bond/cash allocation is around 21%, but about a third of that is a short term loan to MIL while we wait for the sale of her home goes through (we funded much of her new home short term to avoid her withdrawing from her retirement accounts). Equity portions are typically in things like total market, and my wife has a fair portion in a REIT for her Roth.

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tomwood
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Re: What’s in your TSP?

Post by tomwood » Mon Nov 11, 2019 12:28 pm

WhaleMan wrote:
Sun Nov 10, 2019 9:17 pm
I use the L funds. The AA allocation is reasonable and the rebalancing is automatic.

Since the ER are no different, I purposely use the TSP target date funds and this frees my time to focus on my other investments.
Is there an advantage to automatic rebalancing? How often does the L Fund rebalance?

Did you consider moving your other investments into the TSP, if possible, and choose not to do it? Why not?
Is your other retirement account(s) outside of the TSP in a 3 fund portfolio? Thank you for the reply

Lrt12
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Re: What’s in your TSP?

Post by Lrt12 » Mon Nov 11, 2019 12:46 pm

Currently-
G:15%
F: 5%
C: 58%
S: 22%
I: 0% (hold international in husband's Roth IRA)

As others have mentioned we do not hold the L-fund as we look at our portfolio as a whole and hold all bonds in the TSP. My husband's 401K and both of our Roth IRAs are all stock. I rebalance at the beginning of the year within the TSP. I do recommend the L-fund to my coworkers (who ask) who benefit from a set it and forget it approach.

Topic Author
tomwood
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Re: What’s in your TSP?

Post by tomwood » Mon Nov 11, 2019 1:18 pm

Helo80 wrote:
Sun Nov 10, 2019 9:19 pm
renegade06 wrote:
Sun Nov 10, 2019 7:40 pm
I still have trouble understanding whether or not G or F is better.... and whether it's ok to split my bond portion between the two. I know that G has almost no risk and a slightly lower return. I'd appreciate any thoughts people have on the G vs F.

I keep my bonds in the TSP and am 100% equities outside of TSP.
The F-Fund is your bond market index. It offers a slightly higher return, but more risk.

The G-fund is effectively government securities and a very unique and special fund in that it's Government Securities and will slightly outpace inflation. There is no chance of market loss, and funds similar to it are unavailable outside of TSP.
The G Fund sounds special. Do most people with the option of this fund, take full advantage, because it’s so unique?

Helo80
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Re: What’s in your TSP?

Post by Helo80 » Mon Nov 11, 2019 2:08 pm

tomwood wrote:
Mon Nov 11, 2019 1:18 pm
The G Fund sounds special. Do most people with the option of this fund, take full advantage, because it’s so unique?
I would say more so in retirement. When TSP started, I believe it was the only fund available.

G-fund used to be the default for new hires whom did not elect a different fund allocation. Over the years, I guess they realized that too many don't understand investing, and contributions now default into the Lifecycle fund of your retirement year (as close as they can get to it).

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tomwood
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Re: What’s in your TSP?

Post by tomwood » Mon Nov 11, 2019 4:09 pm

Helo80 wrote:
Mon Nov 11, 2019 2:08 pm
tomwood wrote:
Mon Nov 11, 2019 1:18 pm
The G Fund sounds special. Do most people with the option of this fund, take full advantage, because it’s so unique?
I would say more so in retirement. When TSP started, I believe it was the only fund available.

G-fund used to be the default for new hires whom did not elect a different fund allocation. Over the years, I guess they realized that too many don't understand investing, and contributions now default into the Lifecycle fund of your retirement year (as close as they can get to it).
In my early years, would you suggest F Fund, and move to G Fund as I near retirement?

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tomwood
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Re: What’s in your TSP?

Post by tomwood » Mon Nov 11, 2019 4:13 pm

Lrt12 wrote:
Mon Nov 11, 2019 12:46 pm
Currently-
G:15%
F: 5%
C: 58%
S: 22%
I: 0% (hold international in husband's Roth IRA)

As others have mentioned we do not hold the L-fund as we look at our portfolio as a whole and hold all bonds in the TSP. My husband's 401K and both of our Roth IRAs are all stock. I rebalance at the beginning of the year within the TSP. I do recommend the L-fund to my coworkers (who ask) who benefit from a set it and forget it approach.

Thank you for sharing.
I currently manage a 3 fund portfolio, so I don’t mind using that inside my TSP. But with the low fees for the L Fund, does it offers any advantages over the 3 fund portfolio?

You said all bonds are in TSP. Is that because you want all equities in Roth or because of the fees for bonds in the TSP or because the F & G funds are superior to other bond funds?

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tomwood
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Re: What’s in your TSP?

Post by tomwood » Mon Nov 11, 2019 4:16 pm

calmaniac wrote:
Sun Nov 10, 2019 9:48 pm
100% of my TSP is invested in the G fund. I use it a part of my bond allocation.

I'm not a big fan of bonds for young people and was 100% equities until past age 55. But now that I am "of that age" (61) and have shifted my asset allocation, the G Fund serves me well and provides a unique bond investment with reasonable intermediate-long-term bond rates but little downside when interest rates increase.

From the TSP web site, https://www.tsp.gov/InvestmentFunds/Fun ... nce_G.html
"As a result, participants who invest in the G Fund are rewarded with a long-term rate on what is essentially a short-term security. Generally, long-term interest rates are higher than short-term rates."

From the TSPFolio web site, https://www.tspfolio.com/blog/32/The_ou ... and_G_Fund
"Enter the TSP G Fund. Sure, its returns over the past year have been an anemic 1.4 percent. But payment of G Fund principal and interest is guaranteed by the U.S. government. Which is an extremely unusual and valuable feature that many will hopefully learn to appreciate in the decades ahead of us."

Bogle heads G Fund discussions (or just search Bogleheads for "G fund"):
https://www.bogleheads.org/wiki/G_Fund
viewtopic.php?t=238418
viewtopic.php?t=250598

In fact, it is such a good deal that Congress is perennially threatening to lower the rates on the G Fund:
https://www.govexec.com/pay-benefits/20 ... ss/141591/
https://www.fedweek.com/tsp/whats-in-st ... p-in-2019/
Thank you for the detailed reply. At the end you included two links to fed sites. Do you suggest any other Fed sites for new employees to learn what’s taking place that has a more direct impact on their federal work opposed to what headlines might be found in a national paper or on tv?

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tomwood
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Re: What’s in your TSP?

Post by tomwood » Mon Nov 11, 2019 4:19 pm

tigermilk wrote:
Mon Nov 11, 2019 7:44 am
I am about 6.5 years out from my MRA, and don't know if I will punch out then or wait a few years. Up until 2016, I was all C, S, and I in varying percentages (mostly C). Today I sit at around 35% in each of C and S, 15% in I, and the remainder split between G and F. All new paycheck contributions are going in C (35%), S (40%), and I (25%). I slightly increased bonds a few months back since the steam has to be running out on this decade plus run, so a bit of a defensive posture to pocket gains and have some cash available for that potential dip. Just in the last period I started putting my portion into the Roth TSP. I hit 2 commas in my TSP this year and realized that with my planned retirement withdrawal plan that I would likely have away too much in there by the time MRAs come around. Currently in the 22% tax bracket, and between pension and all other revenue streams, will stay in that bracket. So moving to the Roth is a hedge against returning to higher tax brackets (not based on income, but rather if winds change politically) in the future.

My outside accounts are e8ther all equity (our Roths), a mixture of equity and money market (brokerage, with money market due to wanting to use some of the $ short term), or equity/bond (HSA, and the only reason for a bond portion was that this year I had a sizable dental bill not covered by GEHA). Prior to this year, the non-TSP accounts were all equity. Turned 50 this year, and total bond/cash allocation is around 21%, but about a third of that is a short term loan to MIL while we wait for the sale of her home goes through (we funded much of her new home short term to avoid her withdrawing from her retirement accounts). Equity portions are typically in things like total market, and my wife has a fair portion in a REIT for her Roth.
Congrats on your success over the years and thank you for sharing your story.
Were you 100% equities in your TSP for so long because you held bonds in other accounts or because you had a pension?

Lrt12
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Re: What’s in your TSP?

Post by Lrt12 » Mon Nov 11, 2019 4:41 pm

tomwood wrote:
Mon Nov 11, 2019 4:13 pm
Lrt12 wrote:
Mon Nov 11, 2019 12:46 pm
Currently-
G:15%
F: 5%
C: 58%
S: 22%
I: 0% (hold international in husband's Roth IRA)

As others have mentioned we do not hold the L-fund as we look at our portfolio as a whole and hold all bonds in the TSP. My husband's 401K and both of our Roth IRAs are all stock. I rebalance at the beginning of the year within the TSP. I do recommend the L-fund to my coworkers (who ask) who benefit from a set it and forget it approach.

Thank you for sharing.
I currently manage a 3 fund portfolio, so I don’t mind using that inside my TSP. But with the low fees for the L Fund, does it offers any advantages over the 3 fund portfolio?

You said all bonds are in TSP. Is that because you want all equities in Roth or because of the fees for bonds in the TSP or because the F & G funds are superior to other bond funds?

I am 31, DH 30. I have not been invested through a major downturn. I absolutely do not think I would jump ship, but I have not lived it yet. I use the G fund to provide stability to my current portfolio. Our overall AA is 85/15. I am by no means an expert investor, so I try to keep it simple. Roth IRAs are all VTSAX or VTIAX (~10% of stock allocation international). DH's 401K is all the lowest ER S&P 500. Taxable is all VTSAX. In January I rebalance easily in my TSP if I am +/- 5% from my desired asset allocation.

Yes, we will not hold any bonds in our Roth IRAs or taxable accounts for tax efficiency. I see the bond portion of my AA as only for making sure I can handle a downturn. The G-fund provides that as its only risk is inflation risk. There are many threads on this forum discussing the G-fund by people who know a lot more about this stuff than I do :D

If the only account we had was my TSP then I would be in the L fund.

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White Coat Investor
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Re: What’s in your TSP?

Post by White Coat Investor » Mon Nov 11, 2019 4:48 pm

tomwood wrote:
Sat Nov 09, 2019 7:27 am
I’m new to the TSP. Do people who have outside retirement accounts invest differently inside the TSP because of the outside accounts or do they try to have similar investments, such as the 3 fund portfolio, in all accounts?
And are people on this forum, who have a TSP, more likely to use the L Fund over people who only have a life cycle fund available in their 401k with likely higher fees?
Any and all TSP advice is welcomed.
Yes.

My TSP is 100% G Fund. But my overall allocation is 60% stocks, 20% bonds, and 20% real estate.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

cdc
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Re: What’s in your TSP?

Post by cdc » Mon Nov 11, 2019 10:45 pm

I’m 50 C, 10 S, 20 F, 20 G in my TSP. Outside of TSP I utilize a 3 fund portfolio in my rollover IRAs: 50 total stock, 10 Intl, 40 total bond.

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TierArtz
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Re: What’s in your TSP?

Post by TierArtz » Mon Nov 11, 2019 11:55 pm

My TSP is 100% G fund and about 6% of my total portfolio and 17% of my bond slice of a 60/40 mix. Before seeing the beauty of simplicity, I mirrored my allocations (large, small, International, bonds) across the TSP, IRAs, 401K, and taxable. It was an ungainly, tax-inefficient, mess. If my TSP was a major retirement account to me, I’d have a mix of C, S, I, F, and G; and, maybe the G fund would be about 1/3 of my bond slice.

grettman
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Re: What’s in your TSP?

Post by grettman » Tue Nov 12, 2019 6:39 am

31 years of federal service.

90% in c, 5% in s, 4% in I and decimal dust in G.

I do not invest in bonds. Outside of TSP, I have about 3% of entire portfolio in a CD. When the CD matures, I’m tossing it at mortgage.

I am aggressive because I have a high tolerance for risk and the pension doesn’t hurt either.

tigermilk
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Re: What’s in your TSP?

Post by tigermilk » Tue Nov 12, 2019 8:50 am

tomwood wrote:
Mon Nov 11, 2019 4:19 pm
tigermilk wrote:
Mon Nov 11, 2019 7:44 am
stuff deleted...
Congrats on your success over the years and thank you for sharing your story.
Were you 100% equities in your TSP for so long because you held bonds in other accounts or because you had a pension?
I would not say I was 100% equity for so long due to pension, but rather the buying power of biweekly contributions. That is, during much of the accumulation phase, my philosophy is that those personal and government match contributions are a better mechanism than a bond/equity asset allocation and rebalancing. As an example, consider a few simple cases:

1) New employee has a biweekly total contribution of $1000. For sake of argument, let's say the equity and bond share prices at the start are equal at $100 each. This employee decides to go 100/0 equity/bond. After the first paycheck, the employee has $1000 in equities, $0 in bonds. During the next pay period, the market crashes, and values drop by 50%, so $500 in equities. At the next paycheck, the $1000 is still buying equities, so the employee now has $1500 in equities. The next week, stocks rebound back to their original $100 share price, and the employee now has $3000 (the original 10 shares plus the 20 purchased at $50/share due to the "crash"). Now suppose the employee's twin was hired on the same day but went with a 80/20 AA. The same market conditions exist, so after that first paycheck the twin is at $800 and $200 equity/bond. After the crash it's $400 and $200, and the twin rebalances to 80/20 again, so the twin now has 9.6 shares of equity and 1.2 shares of bond. Next pay period comes along and the 80/20 mix means 2 additional shares of bonds and 16 shares of equities can be had. Market rebounds, and the twin now has $2880 in the account. Who made out better?

2) Now consider new employee and the twin years into the future. Employee has $1M in the TSP with a 100/0 AA. The same crash that happened at the beginning of their careers rears its ugly head again. In this case, with the 50% drop one week followed by complete recovery, the employee hs $1.002M in the TSP. But twin, with the 80/20 AA, went from $1M to $1.0818M due to rebalancing and recovery.

While these 2 simple examples are unrealistic, they do show the effect of buying power of contributions relative to AA. There will be unique tipping points for the inifinte number of corrections/recoveries and AAs, but for me, once I got to a point where my/matching annual contributions were less than ~4%, and I was also within the 10 year to MRA time frame, I realized it would be good to capture some gains. For our Roths and HSA, we are still in the accumulation phase, and for the Roths I don't intend to touch them until age 70, so still 20 years off. I started a bit late with our Roths, focusing on elimination of debt (i.e., mortgage), but as of today, annual contributions are on the order of 10% of the balance. I likely will follow a similar strategy for the Roths as the TSP - wait until ~10 years out before the gentle glide path to bond addition.

While the pension helps reduce risk, I look at each component as part of the larger strategy. I have to have a couple of strategies at hand. While I love my job, I also enjoy life, so when 56 years and 10 months rolls around, I will have some difficult decisions. On the one hand, if I punch out, I am looking at a pension that will cover about 80% of our post-tax expenditures. If the SS supplement is still around, we'd be fully covered until 62. But from MRA to 70, the plan would be to essentially pay myself the same salary as now (less the pension and SS supplement until 62) with the TSP, doing Roth conversions along the way. I may front load some of that to take advantage of the lower tax rates if I fear they return to previous levels. Delay SS until 70 to maximize that, and at 70 be golden with a significant Roth account. It should be said that the TSP bond allocation I hold now provides that "bird in the hand" pocketed savings that will guide us through the first years of retirement.

The bonds I have outside the TSP are strictly due to short-term spending requirements. If not for helping my MIL with the purchase of her new house, the bond allocation in my taxable would be much lower, reflecting short-term plans for a needed new roof and such. Honestly, the short term loan to her hurts - we lost out on several thousand $$$ over the summer helping her out. But I was happy to help her.

peseta
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Re: What’s in your TSP?

Post by peseta » Tue Nov 12, 2019 9:35 pm

100% L2040. We mirror it with similar target funds in other accounts. Keep it simple.

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