TSP G Fund: Considered Bonds or Cash

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chrisjul
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TSP G Fund: Considered Bonds or Cash

Post by chrisjul » Sun Feb 10, 2019 11:24 am

I searched the archives but did not find a consistent answer.

Would you consider the G fund bonds or cash for allocation?

Tks in advance.

autopeep
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Re: TSP G Fund: Considered Bonds or Cash

Post by autopeep » Sun Feb 10, 2019 11:28 am

Per the ever useful bogleheads wiki, tsp g functions like a very attractive intermediate bond fund with principal preservation. https://www.bogleheads.org/wiki/Thrift_Savings_Plan

In a sense it is a highly desirable stable value fund I think a better question is why do you care if it's cash or bonds? Meaningless semantics.
Last edited by autopeep on Sun Feb 10, 2019 11:31 am, edited 2 times in total.

Topic Author
chrisjul
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Re: TSP G Fund: Considered Bonds or Cash

Post by chrisjul » Sun Feb 10, 2019 11:28 am

Only for allocation purposes. That is why I care.

deskjockey
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Re: TSP G Fund: Considered Bonds or Cash

Post by deskjockey » Sun Feb 10, 2019 11:29 am

chrisjul wrote:
Sun Feb 10, 2019 11:24 am
I searched the archives but did not find a consistent answer.

Would you consider the G fund bonds or cash for allocation?

Tks in advance.
In my view, the G fund is a unique asset with bond-like returns (by design), so I lump it in with my bond allocation.

autopeep
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Re: TSP G Fund: Considered Bonds or Cash

Post by autopeep » Sun Feb 10, 2019 11:33 am

chrisjul wrote:
Sun Feb 10, 2019 11:28 am
Only for allocation purposes. That is why I care.
Seems like such an effort is over-precise.

pdavi21
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Re: TSP G Fund: Considered Bonds or Cash

Post by pdavi21 » Sun Feb 10, 2019 11:34 am

It is bonds. Whichever classification causes you to buy more stocks, higher risk bonds, or longer duration bonds to make up for the lower risk (and slightly lower return) of G Fund than Total Bond Market is appropriate.

dbr
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Re: TSP G Fund: Considered Bonds or Cash

Post by dbr » Sun Feb 10, 2019 11:35 am

chrisjul wrote:
Sun Feb 10, 2019 11:28 am
Only for allocation purposes. That is why I care.
Then the question is what is the meaning of cash as an asset class? If you decide that then you probably answer the question.

My view is that for asset allocation purposes cash and bonds are part of the same asset class, usually refered to as bonds even if cash under a mattress. One also sometimes calls this fixed income, though assets aren't income and most things in that class aren't fixed either.

Of course what you are getting at is the difference between investments that have stable value and those that fluctuate with the market. It is in the former class by definition, so if that matters to you then that is what it is. Also, if one does one's accounting in real dollars the G fund does not even offer stability of principal.
Last edited by dbr on Sun Feb 10, 2019 11:38 am, edited 1 time in total.

Topic Author
chrisjul
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Re: TSP G Fund: Considered Bonds or Cash

Post by chrisjul » Sun Feb 10, 2019 11:38 am

autopeep wrote:
Sun Feb 10, 2019 11:33 am
chrisjul wrote:
Sun Feb 10, 2019 11:28 am
Only for allocation purposes. That is why I care.
Seems like such an effort is over-precise.
So is responding to threads with no helpful comment.

Topic Author
chrisjul
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Joined: Sun Jan 06, 2008 3:15 pm

Re: TSP G Fund: Considered Bonds or Cash

Post by chrisjul » Sun Feb 10, 2019 11:40 am

dbr wrote:
Sun Feb 10, 2019 11:35 am
chrisjul wrote:
Sun Feb 10, 2019 11:28 am
Only for allocation purposes. That is why I care.
Then the question is what is the meaning of cash as an asset class? If you decide that then you probably answer the question.

My view is that for asset allocation purposes cash and bonds are part of the same asset class, usually refered to as bonds even if cash under a mattress. One also sometimes calls this fixed income, though assets aren't income and most things in that class aren't fixed either.

Of course what you are getting at is the difference between investments that have stable value and those that fluctuate with the market. It is in the former class by definition, so if that matters to you then that is what it is. Also, if one does one's accounting in real dollars the G fund does not even offer stability of principal.
Yes, exactly. I guess one might reduce other bond holdings if the G fund is also considered bonds. It really SEEMS more like a cash money market funds.

dbr
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Re: TSP G Fund: Considered Bonds or Cash

Post by dbr » Sun Feb 10, 2019 11:44 am

chrisjul wrote:
Sun Feb 10, 2019 11:40 am
dbr wrote:
Sun Feb 10, 2019 11:35 am
chrisjul wrote:
Sun Feb 10, 2019 11:28 am
Only for allocation purposes. That is why I care.
Then the question is what is the meaning of cash as an asset class? If you decide that then you probably answer the question.

My view is that for asset allocation purposes cash and bonds are part of the same asset class, usually refered to as bonds even if cash under a mattress. One also sometimes calls this fixed income, though assets aren't income and most things in that class aren't fixed either.

Of course what you are getting at is the difference between investments that have stable value and those that fluctuate with the market. It is in the former class by definition, so if that matters to you then that is what it is. Also, if one does one's accounting in real dollars the G fund does not even offer stability of principal.
Yes, exactly. I guess one might reduce other bond holdings if the G fund is also considered bonds. It really SEEMS more like a cash money market funds.
If by asset allocation you mean a division between high risk assets (stocks) and low risk assets (bonds), then the G-fund is bonds and there is no cash. In that context money market funds are also bonds. Don't get sidetracked by what things are called and think rather about what they do in your financial plan.

autopeep
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Re: TSP G Fund: Considered Bonds or Cash

Post by autopeep » Sun Feb 10, 2019 11:44 am

chrisjul wrote:
Sun Feb 10, 2019 11:38 am
autopeep wrote:
Sun Feb 10, 2019 11:33 am
chrisjul wrote:
Sun Feb 10, 2019 11:28 am
Only for allocation purposes. That is why I care.
Seems like such an effort is over-precise.
So is responding to threads with no helpful comment.
You mean other than providing you a link to the info you requested? Good luck with your angels and pins!!!

frugalecon
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Re: TSP G Fund: Considered Bonds or Cash

Post by frugalecon » Sun Feb 10, 2019 12:52 pm

autopeep wrote:
Sun Feb 10, 2019 11:44 am
chrisjul wrote:
Sun Feb 10, 2019 11:38 am
autopeep wrote:
Sun Feb 10, 2019 11:33 am
chrisjul wrote:
Sun Feb 10, 2019 11:28 am
Only for allocation purposes. That is why I care.
Seems like such an effort is over-precise.
So is responding to threads with no helpful comment.
You mean other than providing you a link to the info you requested? Good luck with your angels and pins!!!
Autopeep, thank you for taking the time to provide the link to the wiki in your original answer to the OP’s question. When future BHs search the site for relevant threads before posting this question, it will be helpful to have the link to the wiki high up in the responses. I have been guilty of posting questions before w/o doing a search for relevant threads, but I am trying to be better about it,

2pedals
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Re: TSP G Fund: Considered Bonds or Cash

Post by 2pedals » Sun Feb 10, 2019 1:36 pm

chrisjul wrote:
Sun Feb 10, 2019 11:28 am
Only for allocation purposes. That is why I care.
Cash is something you hold in your mattress or wallet, earns no interest and is not good for much except for convenience reasons and a major disruption of the internet and power grid (I'd rather use credit cards to earn rewards). Savings/money market accounts is a zero duration bond not cash. Stable value is a group short duration bonds that has an insurance wrapper to protect principle and interest rates. If you want to control your duration bond portfolio you could review the TSP G fund portfolio and compare to your desired bond duration and your bond holdings. Many bogleheads use the approach that bonds are for safety. TSP G or Stable Value funds satisfy this safety rule and that is enough information to lump the allocation into the bond allocation.

The simple answer is for allocation purposes I do not care what the difference is between bonds or cash. The cash I hold in my wallet and mattress does not count for anything.
Last edited by 2pedals on Sun Feb 10, 2019 11:02 pm, edited 2 times in total.

MnD
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Re: TSP G Fund: Considered Bonds or Cash

Post by MnD » Sun Feb 10, 2019 1:42 pm

It is a US govt fixed-income asset with characteristics of both cash and Treasury bonds (zero duration and the yield indexed to a weighted average of intermediate term Treasury bonds). If you were entering assets in some sort of retirement calculator that split out cash and bonds, the errors introduced by calling it cash are likely greater than calling it bonds as there is a significant long-term yield difference between cash and intermediate term bonds.

Personal Capital bins it as "US government bonds" which is technically correct.

https://www.tsp.gov/InvestmentFunds/Fun ... nce_G.html
The G Fund invests exclusively in a nonmarketable short-term U.S. Treasury security that is specially issued to the TSP.
The payment of G Fund principal and interest is guaranteed by the U.S. Government. This means that the U.S. Government will always make the required payments. In other words, your G Fund investment is not subject to credit (default) risk.

retiredjg
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Re: TSP G Fund: Considered Bonds or Cash

Post by retiredjg » Sun Feb 10, 2019 2:01 pm

chrisjul wrote:
Sun Feb 10, 2019 11:24 am
Would you consider the G fund bonds or cash for allocation?
It depends entirely on your reason for having a cash allocation.

Many people in accumulation (and even retirement) do not have an allocation to cash at all, so the question may not even make sense to people in that situation.

My answer - the G Fund could be counted as cash, as a short term bond, or as an immediate term bond depending on how you see things. I split things into stocks and bonds so the G fund is part of my bond allocation.

What is your reason for having a cash allocation?

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whodidntante
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Re: TSP G Fund: Considered Bonds or Cash

Post by whodidntante » Sun Feb 10, 2019 2:05 pm

Call it whatever you want but buy it. It is an excellent offering and better than what is available to retail investors.

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Earl Lemongrab
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Re: TSP G Fund: Considered Bonds or Cash

Post by Earl Lemongrab » Sun Feb 10, 2019 2:56 pm

It's easiest to just label the category "fixed income".
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Earl Lemongrab
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Re: TSP G Fund: Considered Bonds or Cash

Post by Earl Lemongrab » Sun Feb 10, 2019 2:58 pm

whodidntante wrote:
Sun Feb 10, 2019 2:05 pm
Call it whatever you want but buy it. It is an excellent offering and better than what is available to retail investors.
I don't agree with that. It's a decent rate for its general category, but certainly not the best. The security is top-notch, but does that make it better than say TIAA? Or my MegaCorp plan's stable-value?
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

carol-brennan
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Re: TSP G Fund: Considered Bonds or Cash

Post by carol-brennan » Sun Feb 10, 2019 3:02 pm

The makeup of the L fund (and other target date funds in the TSP) would suggest that the G is not the same as a bond fund, since the TSP funds include both G and bonds.

BTW, most of the TSP's target date funds are on a "rising glide path" for the next 10 years or so. They're good funds. I'd pick one according to your risk tolerance and forget it.

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SagaciousTraveler
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Re: TSP G Fund: Considered Bonds or Cash

Post by SagaciousTraveler » Sun Feb 10, 2019 3:45 pm

For my retirement investment plan, the G Fund currently acts as my fixed income allocation. I don't have a cash allocation for my retirement investment plan.

For my taxable investment plan (brokerage), I do. However, it's not really cash but money market.

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whodidntante
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Re: TSP G Fund: Considered Bonds or Cash

Post by whodidntante » Sun Feb 10, 2019 3:54 pm

Earl Lemongrab wrote:
Sun Feb 10, 2019 2:58 pm
whodidntante wrote:
Sun Feb 10, 2019 2:05 pm
Call it whatever you want but buy it. It is an excellent offering and better than what is available to retail investors.
I don't agree with that. It's a decent rate for its general category, but certainly not the best. The security is top-notch, but does that make it better than say TIAA? Or my MegaCorp plan's stable-value?
Can I purchase your stable value fund as a retail investor? The one I can buy isn't as good as G fund. I looked at the TIAA traditional retail offering and didn't like the liquidity restrictions, restrictions that the G fund does not have.

I was not stating that the G in the G fund stands for "greatest" fund. :beer

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Earl Lemongrab
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Re: TSP G Fund: Considered Bonds or Cash

Post by Earl Lemongrab » Sun Feb 10, 2019 4:01 pm

whodidntante wrote:
Sun Feb 10, 2019 3:54 pm
Earl Lemongrab wrote:
Sun Feb 10, 2019 2:58 pm
whodidntante wrote:
Sun Feb 10, 2019 2:05 pm
Call it whatever you want but buy it. It is an excellent offering and better than what is available to retail investors.
I don't agree with that. It's a decent rate for its general category, but certainly not the best. The security is top-notch, but does that make it better than say TIAA? Or my MegaCorp plan's stable-value?
Can I purchase your stable value fund as a retail investor? The one I can buy isn't as good as G fund. I looked at the TIAA traditional retail offering and didn't like the liquidity restrictions, restrictions that the G fund does not have.

I was not stating that the G in the G fund stands for "greatest" fund.
Oh, well, if by retail you mean outside of the tax-advantaged accounts, then sure. But that, as you point out, is not a unique feature of G fund.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

cdc
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Re: TSP G Fund: Considered Bonds or Cash

Post by cdc » Sun Feb 10, 2019 4:55 pm

I consider the G fund to be part of my bond allocation.

rkhusky
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Re: TSP G Fund: Considered Bonds or Cash

Post by rkhusky » Sun Feb 10, 2019 9:08 pm

chrisjul wrote:
Sun Feb 10, 2019 11:24 am
I searched the archives but did not find a consistent answer.

Would you consider the G fund bonds or cash for allocation?

Tks in advance.
I would put it into the short term bond category.

Tdubs
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Re: TSP G Fund: Considered Bonds or Cash

Post by Tdubs » Sun Feb 10, 2019 10:26 pm

How about creating a category called "really really good cash"? It has the liquidity and security of a basic bank account, but about 0.4% better interest than any of them.

texasdiver
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Re: TSP G Fund: Considered Bonds or Cash

Post by texasdiver » Sun Feb 10, 2019 10:58 pm

I treat it as bonds.

I'm aiming at 60/40 equity/fixed income and it is part of my 40% fixed. If you don't want to call it bonds, call it fixed income. For me it doesn't matter.

I don't have a cash allocation other than what is in my checking account. But then I'm still in the accumulation phase so I don't see the point.

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