TSP Allocation

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LIGuy82
Posts: 72
Joined: Mon Apr 16, 2018 12:51 am

TSP Allocation

Post by LIGuy82 » Mon Apr 16, 2018 12:59 am

Currently, my TSP allocation is as follows, and I was curious if it would be a good idea to contribute something to the G fund, and treat is as a cash reserve. By doing this, should there be a large correction, I could theoretically use the funds in G to pick up S funds cheaply, offsetting losses made by the aforementioned correction. I realize this borders on timing the market, but every managed fund has a cash reserve to do just this. I would appreciate any opinions people have on this idea, or on my TSP allocation. Thanks!

C Fund - 60%
S Fund - 15%
I Fund - 25%

I just changed to contribute 70% to traditional TSP, and 30% to Roth TSP, in addition to maxing out a Roth IRA.

I realize that is an aggressive allocation, but I am 35, own an investment property with a solid cash-to-cash ROI. Combine that with retirement savings, pension eligibility at age 50, and the Social Security supplement, which I can receive at ages 50-62. I welcome any general advice in addition to the question posed above. Thanks!
Last edited by LIGuy82 on Mon Apr 16, 2018 10:52 pm, edited 1 time in total.

Swansea
Posts: 578
Joined: Sat Feb 13, 2016 5:16 am

Re: TSP Allocation

Post by Swansea » Mon Apr 16, 2018 5:10 am

I was 100% stock in the TSP until I left the Feds at age 57. At age 35, even if you were not to receive a pension, I would stay in 100% stock. Actively managed funds hold some cash, which is one reason they often under perform the market.
Also, my one time record of trying to time the stock market did not end well.

TexMexIndex
Posts: 30
Joined: Wed Mar 28, 2018 12:38 pm

Re: TSP Allocation

Post by TexMexIndex » Mon Apr 16, 2018 8:11 am

Why makes things more complex than you need too? You could just throw it in the L 2050 fund and let it ride.
https://www.tsp.gov/InvestmentFunds/Fun ... L2050.html

LIGuy82
Posts: 72
Joined: Mon Apr 16, 2018 12:51 am

Re: TSP Allocation

Post by LIGuy82 » Mon Apr 16, 2018 3:58 pm

Swansea wrote:
Mon Apr 16, 2018 5:10 am
I was 100% stock in the TSP until I left the Feds at age 57. At age 35, even if you were not to receive a pension, I would stay in 100% stock. Actively managed funds hold some cash, which is one reason they often under perform the market.
Also, my one time record of trying to time the stock market did not end well.
Very interesting - I had not thought of it like that. I knew what I was asking was verging on timing the market, but figured I would throw it out there. Thanks for the advice.

LIGuy82
Posts: 72
Joined: Mon Apr 16, 2018 12:51 am

Re: TSP Allocation

Post by LIGuy82 » Mon Apr 16, 2018 3:59 pm

TexMexIndex wrote:
Mon Apr 16, 2018 8:11 am
Why makes things more complex than you need too? You could just throw it in the L 2050 fund and let it ride.
https://www.tsp.gov/InvestmentFunds/Fun ... L2050.html
The target-retirement funds are too conservative in my case, given what I expect my pension to be, plus the early social security payment, as well as other investments, but thanks very much for the suggestion.

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TimeRunner
Posts: 1428
Joined: Sat Dec 29, 2012 9:23 pm

Re: TSP Allocation

Post by TimeRunner » Mon Apr 16, 2018 4:23 pm

You are buying new TSP stock shares every pay period, so if a fund goes down, you'll buy a bit more shares, and if it goes up, a bit less. Just leave it on autopilot and don't be tempted to futz with it. :beer
"What'd ya expect in an opera, a happy ending?" -Bugs Bunny. "You gotta fight for your right to party!" -Beastie Boys

pilot_error
Posts: 46
Joined: Sat Sep 17, 2016 12:10 pm

Re: TSP Allocation

Post by pilot_error » Mon Apr 16, 2018 8:15 pm

Why the strong weight towards S fund instead of C? My allocation is almost identical but reverse.

RamblinDoc
Posts: 147
Joined: Sun Jan 14, 2018 2:26 pm

Re: TSP Allocation

Post by RamblinDoc » Mon Apr 16, 2018 8:35 pm

You can even split the TSP into Roth if it helps you.

I plan to split 50:50 into traditional:Roth TSP: 6-months into traditional (emphasis on G & F funds), then 6-months into Roth TSP (emphasis on C, S, & maybe I funds). This would minimize tax drag down the road.

Rebalancing can occur in Roth IRA, then TSP if needed.

rkhusky
Posts: 5878
Joined: Thu Aug 18, 2011 8:09 pm

Re: TSP Allocation

Post by rkhusky » Mon Apr 16, 2018 10:00 pm

RamblinDoc wrote:
Mon Apr 16, 2018 8:35 pm
You can even split the TSP into Roth if it helps you.

I plan to split 50:50 into traditional:Roth TSP: 6-months into traditional (emphasis on G & F funds), then 6-months into Roth TSP (emphasis on C, S, & maybe I funds). This would minimize tax drag down the road.

Rebalancing can occur in Roth IRA, then TSP if needed.
I thought you had to have the same allocation in Traditional and Roth.

kelvan80
Posts: 90
Joined: Sun Jan 12, 2014 10:06 pm

Re: TSP Allocation

Post by kelvan80 » Mon Apr 16, 2018 10:22 pm

We utilize the G fund for the bond portion of the TSP to free up our Roth IRAs for domestic and international stock indexes and allow for rebalancing if needed. You mentioned maxing out a Roth IRA but didn't say what you are investing in there. I'm guessing no bonds?

LIGuy82
Posts: 72
Joined: Mon Apr 16, 2018 12:51 am

Re: TSP Allocation

Post by LIGuy82 » Mon Apr 16, 2018 10:54 pm

pilot_error wrote:
Mon Apr 16, 2018 8:15 pm
Why the strong weight towards S fund instead of C? My allocation is almost identical but reverse.
I made an error in posting - the numbers are correct but I mixed up S and C (I was likely thinking S&P 500 when I did it). I have edited the original post - looks like we are more similar than I led you to believe...in error. Thanks for pointing that out.

LIGuy82
Posts: 72
Joined: Mon Apr 16, 2018 12:51 am

Re: TSP Allocation

Post by LIGuy82 » Mon Apr 16, 2018 10:56 pm

kelvan80 wrote:
Mon Apr 16, 2018 10:22 pm
We utilize the G fund for the bond portion of the TSP to free up our Roth IRAs for domestic and international stock indexes and allow for rebalancing if needed. You mentioned maxing out a Roth IRA but didn't say what you are investing in there. I'm guessing no bonds?
Correct, no bonds. I have my Roth IRA entirely in the Vanguard S&P 500 Index Fund (VFIAX). I view my pension and Social Security as an annuity, and am willing to stomach market swings for the foreseeable future with the goal being to maximize growth. As time goes by, I will probably add Emerging Markets Roth IRA.

RamblinDoc
Posts: 147
Joined: Sun Jan 14, 2018 2:26 pm

Re: TSP Allocation

Post by RamblinDoc » Mon Apr 16, 2018 11:02 pm

rkhusky wrote:
Mon Apr 16, 2018 10:00 pm
RamblinDoc wrote:
Mon Apr 16, 2018 8:35 pm
You can even split the TSP into Roth if it helps you.

I plan to split 50:50 into traditional:Roth TSP: 6-months into traditional (emphasis on G & F funds), then 6-months into Roth TSP (emphasis on C, S, & maybe I funds). This would minimize tax drag down the road.

Rebalancing can occur in Roth IRA, then TSP if needed.
I thought you had to have the same allocation in Traditional and Roth.
If you contribute to both traditional and Roth during the same pay period, your allocation evenly distributes to both. However, if you separate contributions - i.e. only do Traditional one month and Roth another month, you can specify which funds go into what type of tax-advantaged portion. (Just be aware that your take-home pay will fluctuate depending on which TSP you are weighting that month). It is a little more work and makes re-balancing within the TSP with existing funds problematic. I just plan to re-balance in my Roth IRA or with future TSP contributions. It might not be perfect, but more likely than not, funds will be in the appropriate vehicle...

LIGuy82
Posts: 72
Joined: Mon Apr 16, 2018 12:51 am

Re: TSP Allocation

Post by LIGuy82 » Mon Apr 16, 2018 11:05 pm

rkhusky wrote:
Mon Apr 16, 2018 10:00 pm
RamblinDoc wrote:
Mon Apr 16, 2018 8:35 pm
You can even split the TSP into Roth if it helps you.

I plan to split 50:50 into traditional:Roth TSP: 6-months into traditional (emphasis on G & F funds), then 6-months into Roth TSP (emphasis on C, S, & maybe I funds). This would minimize tax drag down the road.

Rebalancing can occur in Roth IRA, then TSP if needed.
I thought you had to have the same allocation in Traditional and Roth.
I "split" my contributions between the two by putting $512 per pay period into traditional and $200 per pay period into Roth. After the employee match, I am putting 63 percent of savings into traditional TSP and 37 percent into Roth-IRA and Roth-TSP combined. Remember that any employee match goes into the traditional TSP, even if you are putting 100% of your contributions into Roth-TSP.

RamblinDoc
Posts: 147
Joined: Sun Jan 14, 2018 2:26 pm

Re: TSP Allocation

Post by RamblinDoc » Tue Apr 17, 2018 12:02 am

LIGuy82 wrote:
Mon Apr 16, 2018 11:05 pm
rkhusky wrote:
Mon Apr 16, 2018 10:00 pm
RamblinDoc wrote:
Mon Apr 16, 2018 8:35 pm
You can even split the TSP into Roth if it helps you.

I plan to split 50:50 into traditional:Roth TSP: 6-months into traditional (emphasis on G & F funds), then 6-months into Roth TSP (emphasis on C, S, & maybe I funds). This would minimize tax drag down the road.

Rebalancing can occur in Roth IRA, then TSP if needed.
I thought you had to have the same allocation in Traditional and Roth.
I "split" my contributions between the two by putting $512 per pay period into traditional and $200 per pay period into Roth. After the employee match, I am putting 63 percent of savings into traditional TSP and 37 percent into Roth-IRA and Roth-TSP combined. Remember that any employee match goes into the traditional TSP, even if you are putting 100% of your contributions into Roth-TSP.
Good point. Unfortunately, I do not get the match. :(

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