TSP Advice for Good Investors

[Anonymous]

I've been a fed for 12 years and always put the max in my TSP. I now have close to $400,000. All of my. Money is in lifecycle LFund 2040. I realize I need a better mix of funds since the LFunds are not doing well. Any suggestions? I'm 39, married with two kids. Thank you.

[Anonymous]

C. Why not tie your money to the S&P rather than having it go into things like international or small cap (which is where a lot of the L funds are allocated) as those don't consistently do well or at least they don't consistently outperform the S&P.

If putting it all in C is too much for you -- you could make a shift to 50% C and 50% L.

[Anonymous]

The L is too conservative. I have 45% in C and 40% in S, 10% in I. The remainder is in G and F. I started with L2040 since that is the year when I turn 57 and moved once I realized how conservative it was.

You're still ahead of many. I have a colleague who has maxed every year but has remained in the G fund!

[Anonymous]

Yep, I've always maxed out. Mainly in C fund. Have close to $1M in there.

[Anonymous]

A few years younger than you and I do 75% C and 25% L2050. Accounting for the 25% distribution in L2050, in total -- I end up holding 86% in C (the 75% I put in + the allocation of L2050 into C); 4% in S; 6% in I; and 4% in G and F (combined - prob like 2% in each).

Honestly I'm thinking of lowering L2050 a bit more next yr and putting a few more % into C so that I'm at 90% C.

[Anonymous]

Anonymous wrote:The L is too conservative. I have 45% in C and 40% in S, 10% in I. The remainder is in G and F. I started with L2040 since that is the year when I turn 57 and moved once I realized how conservative it was.

You're still ahead of many. I have a colleague who has maxed every year but has remained in the G fund!

Wow -- why bother?! Does he or she not understand investing or are they THAT risk averse?

[Anonymous]

You need to decide what your risk tolerance is but getting out of the L funds because you think they aren't doing well is a terrible idea.

First of all, different asset classes perform well at different times, so chasing returns by investing is whatever is doing well now is a recipe for never being invested in what is doing well when it is doing well.

Second, TSP has put a lot of effort into thinking about how to balance risk vs reward vs time horizon, so if you haven't spent the time determining your preferred asset allocation and risk tolerance then I'd be cautious about thinking you'd do better on your own.

It's fine to decide to be in C fund because you want to be 100% in the S&P500 but unless you've thought about the pros and cons of that and are comfortable with them, moving all your money to the C fund because it seems to be doing better right now is a bad idea.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The L is too conservative. I have 45% in C and 40% in S, 10% in I. The remainder is in G and F. I started with L2040 since that is the year when I turn 57 and moved once I realized how conservative it was.

You're still ahead of many. I have a colleague who has maxed every year but has remained in the G fund!

Wow -- why bother?! Does he or she not understand investing or are they THAT risk averse?

I think she might be seeing the light now. She joined in 2006 and I tried to convince her in 2008 to move to at least the L2040. Then, the market crashed, so you can imagined that how that helped my argument. Her parents were poor immigrants and she's extremely frugal with money. I think she's extremely risk averse. The last time we discussed was a couple years ago and she was willing to consider the L2040 but I never followed up. I'll try to remember to this week.

[Anonymous]

Anonymous wrote:C. Why not tie your money to the S&P rather than having it go into things like international or small cap (which is where a lot of the L funds are allocated) as those don't consistently do well or at least they don't consistently outperform the S&P.

If putting it all in C is too much for you -- you could make a shift to 50% C and 50% L.

All S&P 500 is not a good strategy. It's all large cap with home country bias. Better diversification with small and int'l.

[Anonymous]

Actually now is a good time to put a large chunk (if not all) of your money (intra fund transfer, not allocation) into G... At least until after the election.

[Anonymous]

Anonymous wrote:Yep, I've always maxed out. Mainly in C fund. Have close to $1M in there.

How long have you been a fed?

[Anonymous]

Anonymous wrote:I've been a fed for 12 years and always put the max in my TSP. I now have close to $400,000. All of my. Money is in lifecycle LFund 2040. I realize I need a better mix of funds since the LFunds are not doing well. Any suggestions? I'm 39, married with two kids. Thank you.

Ummm, L2040 is up almost 6% YTD and 10% over the past year. You're doing fine as-is. As any boglehead would say, "Don't do something, just stand there!"


But I do agree with the other posters mentioning that the L funds are WAY too conservative. L2040 already has over a quarter of its holdings in bonds, which is a little high for my tastes when retirement is still 20+ years away:


Personally, I let it all ride on 70%C / 20%S / 10%G and then rebalance when the G-Fund goes <9% or >11%, or after a RBD (really bad day). A mix of C:S between a 3:1 to 4:1 ratio replicates the entire US stock market. I don't see any need for international since Coca-Cola, Ford, and Levi's (along with every other major US corporation) does plenty of business overseas. Likewise, the G-Fund is a better bond since it never loses value (free lunch!), whereas the F-Fund can and does.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yep, I've always maxed out. Mainly in C fund. Have close to $1M in there.

How long have you been a fed?

Curious about how long this took, also.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I've been a fed for 12 years and always put the max in my TSP. I now have close to $400,000. All of my. Money is in lifecycle LFund 2040. I realize I need a better mix of funds since the LFunds are not doing well. Any suggestions? I'm 39, married with two kids. Thank you.

Ummm, L2040 is up almost 6% YTD and 10% over the past year. You're doing fine as-is. As any boglehead would say, "Don't do something, just stand there!"


But I do agree with the other posters mentioning that the L funds are WAY too conservative. L2040 already has over a quarter of its holdings in bonds, which is a little high for my tastes when retirement is still 20+ years away:


Personally, I let it all ride on 70%C / 20%S / 10%G and then rebalance when the G-Fund goes <9% or >11%, or after a RBD (really bad day). A mix of C:S between a 3:1 to 4:1 ratio replicates the entire US stock market. I don't see any need for international since Coca-Cola, Ford, and Levi's (along with every other major US corporation) does plenty of business overseas. Likewise, the G-Fund is a better bond since it never loses value (free lunch!), whereas the F-Fund can and does.

Hey why do I need to rebalance my fund allocations? I chose my fund allocations, but why do they automatically steer one way and go out of wack? Basic question I know...it's just strange that the allocations change. Is it based on how well one is doing? The allocations automatically change?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been a fed for 12 years and always put the max in my TSP. I now have close to $400,000. All of my. Money is in lifecycle LFund 2040. I realize I need a better mix of funds since the LFunds are not doing well. Any suggestions? I'm 39, married with two kids. Thank you.

Ummm, L2040 is up almost 6% YTD and 10% over the past year. You're doing fine as-is. As any boglehead would say, "Don't do something, just stand there!"


But I do agree with the other posters mentioning that the L funds are WAY too conservative. L2040 already has over a quarter of its holdings in bonds, which is a little high for my tastes when retirement is still 20+ years away:


Personally, I let it all ride on 70%C / 20%S / 10%G and then rebalance when the G-Fund goes <9% or >11%, or after a RBD (really bad day). A mix of C:S between a 3:1 to 4:1 ratio replicates the entire US stock market. I don't see any need for international since Coca-Cola, Ford, and Levi's (along with every other major US corporation) does plenty of business overseas. Likewise, the G-Fund is a better bond since it never loses value (free lunch!), whereas the F-Fund can and does.

Hey why do I need to rebalance my fund allocations? I chose my fund allocations, but why do they automatically steer one way and go out of wack? Basic question I know...it's just strange that the allocations change. Is it based on how well one is doing? The allocations automatically change?

I assume you are referring to L funds?