Federal employee, how do you choose your TSP investment?

[Anonymous]

The options are: L income, L2020, L2030, L2040, L2050, G fund, S fund, C fund, F fund, and I fund.

How do you distribute your investment? 10% each?

[Anonymous]

No please don't do that.

My suggestion is that you just pick the L fund closest to your expected retirement date.

If you want to get more in the weeds than that, pick the L fund (or combination of funds) that matches your current/expected risk tolerance/preferred asset allocation.

[Anonymous]

depends on how old you are, the number of years in the service, and/or when you plan to retire.

[Anonymous]

C 65%
S 20%
I 15%

done.

[Anonymous]

Pick the one closest to your retirement year. I'm in L2040 and have been very happy with the rate of growth.

[Anonymous]

An L Fund is your best bet if you want to keep it simple.

[Anonymous]

Anonymous wrote:C 65%
S 20%
I 15%

done.

This, but feel free to alter the %'s.

[Anonymous]

nest eggs in L fund and new investment in CSI.

[Anonymous]

Anonymous wrote:C 65%
S 20%
I 15%

done.

That's 100% in the stock market-- not what I would recommend for anyone, but particularly not for someone who doesn't understand what they are doing.

Stick with the L fund-- they have full-time professionals who have spent a long time thinking about the efficient frontier and how to get the best return for the least risk at every stage of your career.

[Anonymous]

Anonymous wrote:C 65%
S 20%
I 15%

done.

I do 40/40/20 myself. I used to do the L fund but I'm find putting everything in the market. As a federal employee you should be able to absorb the risk because you have a pension which is like a giant bond. If half your retirement is already in a bond why put anything in G?

I'm not an expert on F but it's my understanding that it's only usful to invest in when interest rates are high. While rates are low, corporate bonds bought are going to have little profit.

[Anonymous]

tsppilot.com has saved me its annual cost many times over, I've used it for well over 10 yrs. I have no connection other than as a paying subscriber.

They don't do market timing or any sketchy methodology, it is all analysis based and clearly laid out for you to see and decide to follow, or not. At a minimum it's useful information from a historically strong analytical perspective.

I generally follow their recommendations and they avoided a huge loss for us in '08 and have gotten good returns consistently compared to any off-the-shelf formula or relying on an L Fund (a real broad brush, scatter gun kind of one size fits all attempt).

[Anonymous]

The L funds are a touch more conservative than my own preferences, so I've picked one for the decade beyond when I would potentially retire.

[Anonymous]

Anonymous wrote:

Anonymous wrote:C 65%
S 20%
I 15%

done.

I do 40/40/20 myself. I used to do the L fund but I'm find putting everything in the market. As a federal employee you should be able to absorb the risk because you have a pension which is like a giant bond. If half your retirement is already in a bond why put anything in G?

I'm not an expert on F but it's my understanding that it's only usful to invest in when interest rates are high. While rates are low, corporate bonds bought are going to have little profit.

Interesting analysis but I don't agree with it at all. Your "pension" that you refer to is, I assume your TSP annuity? That's only part of your retirement plan and getting a strong return on your TSP account part is critical to a successful retirement scenario, so the idea that you can absorb the risk of being improperly allocated is misguided IMO, especially later in your career. Risking a 20%+ loss in a bad year on a TSP account of, say, $800k (not unheard of) fully invested in equities can really put a crimp in your retirement financial picture.

Do you understand that the G fund is not a bond fund? I don't understand why you equate it with bond investments (which are the F fund). In fact, the G fund is the lowest cost, highest return money market type fund you can find, that's where you want to park the cash portion of your portfolio IMO because whatever the interest rates are, you'll get more in the G fund than from Vanguard Prime or Fidelity Cash Reserves, etc. You're not going to grow that part of the portfolio much right now but it is a downside cushion. The G fund & bonds are apples & oranges.

[Anonymous]

NP. I think PP meant FERS.

[Anonymous]

Anonymous wrote:NP. I think PP meant FERS.

Correct... FERS annuity...

Your FERS annuity won't carry you if you don't do well with your TSP account (maximize contributions, allocate prudently for good growth, etc.). Most people will need all 3 legs (FERS annuity + TSP account + Social Security) to make retirement work.