TSP asset allocation

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dumbttt
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Joined: Sun Jan 09, 2011 2:59 pm

TSP asset allocation

Post by dumbttt » Sat Feb 06, 2016 10:28 am

I'm in my 30's with about 30 years to go until retirement. As a Fed I also get pension. I plan to rollover all of my retirement savings into TSP.

Do I really need bonds in my portfolio? My pension is pretty much a fixed income asset. It seems I can go with an all equity allocation.

rkhusky
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Re: TSP asset allocation

Post by rkhusky » Sat Feb 06, 2016 11:34 am

dumbttt wrote:I'm in my 30's with about 30 years to go until retirement. As a Fed I also get pension. I plan to rollover all of my retirement savings into TSP.

Do I really need bonds in my portfolio? My pension is pretty much a fixed income asset. It seems I can go with an all equity allocation.
You can't roll Roth IRA's into TSP. What happens if you have to leave government service earlier than expected?

I prefer to think of a pension as reducing expected expenses, rather than as an investment like bonds. You can't rebalance from your pension into stocks, or from stocks into your pension.

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Sbashore
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Location: Goodyear, AZ

Re: TSP asset allocation

Post by Sbashore » Sat Feb 06, 2016 11:44 am

Why don't you look at the Lifecycle Funds ? Set it and forget it, plus it's a great bargain. Pick a fund that is as aggressive as you want without regard to actual retirement date.
Steve | Semper Fi

retiredjg
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Re: TSP asset allocation

Post by retiredjg » Sat Feb 06, 2016 12:55 pm

dumbttt wrote:Do I really need bonds in my portfolio? My pension is pretty much a fixed income asset. It seems I can go with an all equity allocation.
If you had a fair amount of money invested in 2007 when the last big downturn started and if you simply didn't notice the drop in value of your investments…sure 100% stocks might be fine for you.

If not, don't underestimate the emotional reaction you can have when you see your money literally disappear and not reappear for several years. Have some bonds.

jchris
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Re: TSP asset allocation

Post by jchris » Sat Feb 06, 2016 2:03 pm

I was 100% C fund for the first 20 years of my career, then started adding bonds and transitioning to a more conservative asset allocation. I am about 70/30 now, about 5 years out from retirement, and will continue to shift toward bonds over the next several years. Like was said above, if you have the stomach to handle the big drops without jumping out at the bottom, then sure, you can do this early in your career. Not sure I'd want to keep rolling that way closer to retirement though.

Adam11
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Re: TSP asset allocation

Post by Adam11 » Sat Feb 06, 2016 3:29 pm

dumbttt wrote:I'm in my 30's with about 30 years to go until retirement. As a Fed I also get pension. I plan to rollover all of my retirement savings into TSP.

Do I really need bonds in my portfolio? My pension is pretty much a fixed income asset. It seems I can go with an all equity allocation.
You may be able to retire a little sooner than you think if you've already been a fed for a while. Your MRA is 57 and you can retire then immediately on a full and unreduced pension if you have 30 years of service. Or the same full pension at 60 with 20 years of service. There is absolutely no reason a federal employee who was a consistent and diligent saver through their entire career can't retire then. You'd be eligible for the FERS supplement as well.

If either of these ages fit your situation, you have some harder numbers to calculate your pension for that projected base floor-income in retirement. Also, if leaving ever crosses your mind, you'll have earned the pension with five years of service and can defer to collect it unreduced at 62. Lastly, your pension is not cash that you can invest with until the month you collect it...30 years from now. TSP funds, contributed and earned, are fully investable in any way you choose.

As far as the TSP goes, I grew tired of never having any "dry powder" to re-balance with when the market dipped while holding 100% stock. I finally convinced myself of the solution and eventually went 10% into the G-Fund and split the the rest amongst C/S/I. I've slept like a baby ever since. Re-balancing is easy and you can't get it wrong. The fact that the G-Fund never loses value seals the deal.

Good luck! If you frequent bogleheads often as a fed, you're FAR ahead already.

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sometimesinvestor
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Re: TSP asset allocation

Post by sometimesinvestor » Sat Feb 06, 2016 5:18 pm

agree that some money in the G fund a fine idea.

kaudrey
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Re: TSP asset allocation

Post by kaudrey » Mon Feb 08, 2016 11:20 am

Hi,

I am a 47 year old fed who plans to retire in 10 years (at MRA).

Look at the AA for your retirement portfolio as a whole - does your spouse have a retirement account(s)? TSP shouldn't be considered in isolation.

Having said that, I have been aggressive throughout my investing years (the last 25 years) because I assumed I'd be a fed "lifer"; and my AA was 90/10 until about 2 years ago. I have slowly been transitioning to 80/20, and will work to get to 75/25 by the time I am 50.

There is nothing wrong with being aggressive when you have a long time horizon - maybe revisit every few years or as your situation changes and see if it needs to be revisited.

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