Fellow feds, I would appreciate your TSP advice

[mc6]

Lord willin' and the creek don't rise, I'll retire in 2027.  When I first started contributing to the TSP I went mostly with the riskiest choice, then over the years became more risk averse after seeing my balance plummet circa 2008.  The way I have it set up now, I have 40% going to Lifecycle 2030 and 60% to the G fund.  I feel like this isn't a good choice either.  My account balance is roughly $88K.

If you were me, what would YOU do? 

[sol]

2027 is still a ways off, so max your contribution and stick with it. 

I certainly don't intend to work that long and my TSP is 100% L2050 for new contributions, and about half L2040 for old contributions, despite my intention to retire within five years.  You're only earning 1.5% on the G-fund, so I'd start making monthly transfers from G to the L fund of your choice.  Any of the future ones are fine, if they match your risk tolerance.

The way I see it, if the market takes a huge shit in the next five years, then everything will suddenly be on sale (lower in price) and I'll benefit greatly by sticking around to make new contributions until it recovers.  The great thing about youth is that it buys you options.  The worst case scenario is retiring at 45 instead of 40, which is a much easier decision to deal with than facing the same choice when you're 65 and in failing health.

[Mike]

The point of the L funds is to give you a one-size-fits-all diversified portfolio.  Between the automatic rebalancing and the gradual shift into a more conservative allocation (the 2030 fund for example becomes the income fund in 2031), you shouldn't need to invest funds anywhere but an L (unless you're like Sol and appear to want to split the difference in risk/return between L's, which is certainly an option if you plan on retiring several years before / after the target year of the fund).

Rather than dumping 60% into G and 40% into the 2030, you should either contribute 100% to the 2030 or 2020 (I only mention 2020 because you appear to be risk averse).  The G fund is paying such a pitiful amount right now, it's more or less the same as dumping your money into a 2 year CD.  Your ROI would be significantly better even if you shifted that G allocation into the L-inc - which itself is a highly conservative move (the L-inc fund generally returns somewhere in the 3-5% range and has very little volatility; it only lost 5% in 2008 when the stock funds were losing 32-40%).

[HamhockHammock]

Your allocation is now at about 73% bonds (most of which are treasuries, albeit the special ones in the G fund) and 27% stocks. I get that you want to be conservative, but that sounds a bit too conservative for someone who's still accumulating assets for a retirement to start in about 15 years.

I agree with Mike - you might think about using the 2030, which is currently allocated at ~68/32 stock/bonds, or the 2020, which is currently allocated at ~54/46 stocks/bonds.

I am OK with more risk, so I go with an 80/20 allocation. But I don't use the lifecycle funds, since I don't care for the daily rebalancing. I'd prefer to do my own rebalancing annually or semi-annually. But a lot of other people appreciate the set-it-and-forget-it aspect of the L-funds.

[Nords]

When I first started contributing to the TSP I went mostly with the riskiest choice, then over the years became more risk averse after seeing my balance plummet circa 2008. 
The way I have it set up now, I have 40% going to Lifecycle 2030 and 60% to the G fund.  I feel like this isn't a good choice either. 
If you were me, what would YOU do?

First I'd develop an asset allocation plan that let me sleep soundly at night:  http://www.bogleheads.org/wiki/Investment_Policy_Statement 
Right now you're just being whipsawed by your own reaction to market volatility.  If you develop an asset allocation plan then you can at least hold on to it when the market is down 25%, repeating quietly to yourself "I have a plan".

Then I'd use the TSP to implement as much of it as possible with their low expense ratios and their "G" fund.  For example, you may be able to do most of your AA at Vanguard or Fidelity, but one or two asset classes might have much higher expenses (like international funds).  Then you could use the TSP "I" fund.  You might also be investing in bonds and prefer to use the "G" fund.

[Mike]

I wouldn't characterize the G fund as a bond investment per se (that would be the F fund - Vanguard equivalent would be VBMFX).  The closest comparison I could make to it outside the TSP would be something along the lines of a 2 year CD in terms of ROI (the current 5 year yield on US treasuries is also similar).

[Crash87]

If all I had was the tsp, then I would pick an L fund. If I had a Roth and taxable investments too I would peruse bogleheads and learn how to build a portfolio.