Reply to Federal employee, how do you choose your TSP investment?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]C 65%
S 20%
I 15%

done.[/quote]

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.[/quote]

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.

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