hoppy08520 wrote: ↑
Wed Dec 20, 2017 1:32 pm
azanon wrote: ↑
Wed Dec 20, 2017 12:26 pm
It's really not that much advantages, and TSP benefits are oversold...So G fund/slightly better asset protection vs. massively better services at other locations and the advantage of consolidating my retirement accounts in one spot. It's an easy call for me after I retire.
The G Fund and the asset protection are good enough for me, and the disadvantages are not that onerous and they are gradually being remedied.
The G Fund is so good that have been moves in Congress to worsen it. Thankfully these proposals haven't gone anywhere yet (at least for now...
Is G fund really that great? Since the TSP's inception of 1988, the cumulative return of the G fund has been 323.10% vs. 492.12% for F Fund (source: http://www.tsptalk.com/returns/returns3.html
). And the F fund (~ same as Vanguard Total Bond Market), is an extremely steady, low-risk bond fund. To this, i would reference some of the graphs I've seen posted here (I think nisiprius did it once) where he compared total bond to, say, S&P 500 index, and in comparison, Total Bond looks like a straight line with the slightest of waves.
Said another way, the fact that G fund doesn't
have duration has hurt
it's performance so far, relatives to any bond with duration.
I'll say it again; mathematically "duration" risk is zero-sum. It's only a risk from the perspective of if rates go goes up, and up too fast for the interest rate changes to keep up.
Now don't get me wrong; I wouldn't intentionally add duration for no (extra) return. But I'm not going to delude myself into thinking G fund provides massively greater protection than F fund already could or does.
I don't think this is all that much different than trying to claim international stocks are worse than US stocks cause they are invested using different currencies. In practice, that could be a good thing or a bad thing, depending on how well the dollar does vs. foreign currencies. Like duration, it's called a "risk", but it's actually zero-sum or a null over long periods of time.
As soon as the G fund gives the same actual
(not to be confused with expected) return of F fund or better 100% of the time, for less risk, (read: not the opposite for some 30 years now) then I'll be singing the praises of G fund. Until then, call me less than impressed.