Author Topic: TSP fund Allocations  (Read 16645 times)

georgialiving

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TSP fund Allocations
« on: August 20, 2014, 11:30:30 PM »
I am trying to figure out where my retirement funds need to be, and honestly I am not sure I am on the right track.  I am considering purchasing the Bogleheads guide to retirement- do you think that would benefit me?

The first photo is my TSP which has roughly 5k
The second photo is another TSP has roughly 22k
The ROTH IRA (no photo) has 5k which is in an age based- 90%stock 10%bond

georgialiving

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Re: TSP fund Allocations
« Reply #1 on: August 20, 2014, 11:31:58 PM »
I also tried to google this question and could not find a clear answer- does it harm anything to do inter fund transfers?  To move the money around into different places? (example- I fund, S fund etc)

georgialiving

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Re: TSP fund Allocations
« Reply #2 on: August 20, 2014, 11:33:31 PM »
If it is relevant, I am 26 and my husband is 28

Gundy

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Re: TSP fund Allocations
« Reply #3 on: August 21, 2014, 04:01:21 AM »

I haven't read the book myself. But the bogleheads wiki is a great resource to get you started on portfolio allocation. Plus it's a free resource!

To answer your question on interfund transfers, it does not cost you anything.

Looking at your allocation, I see that you have both the L2050 fund as well as a mix of the C, I and S funds. The L2050 fund is already a mix of funds based on retiring around 2050 and in theory will have an appropriate allocation of the 5 individual funds. So by investing a portion of your money in the funds directly as well as the lifecycle fund you are in effect skewing the lifecycle fund away from its intended purpose. I would recommend that you either put everything you have into one lifecycle fund if you prefer a hands off approach, or do some research on bogleheads wiki and choose an allocation that you are comfortable with.

For what it's worth, I'm 34 and my allocation looks like this:
C Fund: 40%
I Fund: 30%
S Fund: 20%
F Fund: 5%
G Fund: 5%

But, that's a little more aggressive than the usual recommendation because I have such a small amount of bonds. But do some reading and find a mix that you are comfortable with. Then use interfund transfers to rebalance once a year and you should be all set. Good luck!


jdmagaw

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Re: TSP fund Allocations
« Reply #4 on: August 21, 2014, 05:59:05 PM »
I'm 56 and my TSP allocation is:
S  15% max
C  40% max
I  15% max
F  30% max
G for cash position

I use "max" because I review my allocations monthly and adjust according to a system called AIM, automatic investment management.  A good place to start understanding this system I think is http://www.jfholdings.pwp.blueyonder.co.uk/.  Check out the examples and links.  Or go right to a bulletin board at http://investorshub.advfn.com/AIM-Users-Bulletin-Board-(AIMUSERS)-AIMUSERS-949/.  I end up adjusting about 3-4 times a year.  Right now, I am 92% G fund and 4% each in the I and S funds, as a result of the big market increases past couple years.  The AIM system right now is calling for about 45% cash, so I'm more conservative than most in taking profits.

Have you checked out http://www.tsptalk.com/?

The book I like best about fund allocation is Investing without Wall Street, by Sheldon Jacobs.  Mr. Jacobs presents allocations for people of different ages.  My TSP allocation above is about mid-way between young people and retired folks.

RFAAOATB

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Re: TSP fund Allocations
« Reply #5 on: August 22, 2014, 01:20:14 PM »
I asked about this a couple months ago.  I switched from 100% lifecycle to 100% S Fund.  I also updated my contribution to 10%.  I'm in the National Guard so contributions are not that much and am chasing growth over the next 20 years. 

hoppy08520

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Re: TSP fund Allocations
« Reply #6 on: August 23, 2014, 07:23:52 AM »
georgialiving, before picking funds, first decide on what you want your overall asset allocation to be. Then pick the funds that help you achieve that.

For example, if you decide you want to be 90% stocks and 10% bonds, then I'd suggest picking the LifeCycle and Vanguard Target Date funds that, collectively across your entire portfolio, get you to that allocation.

That's probably going to be the LifeCycle L2050 and Vanguard 2050 (plus or minus).

I would not suggest holding a LifeCycle fund along with other funds in your TSP. I would just stick with the allocations put together by the TSP Board.

I don't recommend market timing approaches suggested by other thinkers but instead pick an asset allocation you can live with and stick with it.

georgialiving

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Re: TSP fund Allocations
« Reply #7 on: August 23, 2014, 05:11:01 PM »
Thanks for the info everyone- I appreciate all of the advice.  I think I will stick with lifecycle funds for now

dude

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Re: TSP fund Allocations
« Reply #8 on: November 06, 2014, 12:45:06 PM »
Late to the party on this one, but here's one thing I would caution about the L Funds, and especially the longer term funds, like 2040 & 2050.  If you look at the fund sheets, they have a rather high standard deviation for the expected returns -- for the 2050, a roughly 8% expected return with a roughly 17% standard deviation.  See:

https://www.tsp.gov/PDF/formspubs/LFunds.pdf

27% of the L2050 is currently allocated to the I Fund, and it stays above 20% for a long time (use the pinwheel deal on the TSP website to cycle through the future allocations).  Since 8/31/1990, the I Fund has returned a mere 5.9% annualized return, with a whopping 18.1% standard deviation.  Compare that to the C Fund over the same period -- 10.2% return, 18.2% std dev; and the S Fund -- 11.3% return, 20.1% std dev.  In other words, for a 5.9% return an I Fund investor has taken on the same amount of risk as a C Fund investor, who earned 10.3%  For only slightly more risk, the S Fund return is nearly double that of the I Fund.  See here:

http://www.tspfolio.com/tspfunds

No way I'd ever consider having 20+% I Fund in my portfolio.  It's just not worth it.  Also, the I Fund is a pretty antiquated fund insofar as what markets it tracks.  It skews heavily in favor of Europe and Japan, and barely touches emerging markets like China and India.  I've been as high as 10% I Fund, but am now 5% and considering dumping the I Fund altogether (many of the S&P 500 companies are multi-national corporations, so there's plenty of exposure to international markets in an S&P 500 or TSM index fund).

GoldenStache

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Re: TSP fund Allocations
« Reply #9 on: November 07, 2014, 07:45:34 AM »
50% S and 50% C

Let it ride...

randommadness

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Re: TSP fund Allocations
« Reply #10 on: November 10, 2014, 02:23:04 PM »
100% S for over a year.

Did the Last Months Best Fund strat for a while, saw some good gains, but think just staying in C & S is better.  I'll probably diversify to 50/50 eventually.

easton

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Re: TSP fund Allocations
« Reply #11 on: November 10, 2014, 03:57:42 PM »
My allocation is currently what's listed below. Basically 80% stocks, 20% bonds. I'm 27 for reference. I decided on this after countless hours reading bogleheads and other forums devoted to indexing/asset allocation. Basically it seemed like 80/20 was the best mix of risk/performance and that I needed to be well diversified between US and International. I'm pretty much just letting it ride and rebalancing when my ratios get too far out of whack.

For awhile I was using the 2 period RSI indicator and following a bazillion threads on TSPTalk to try and time the market, but with the TSP's limitations (IE 2 moves a month and transaction has to be in before noon) it was too much guesswork/stress and I was lagging the market overall (haha who would have guessed :p). So just sticking to my AA and letting it ride for the forseeable future, rebalancing as necessary.

G- 20%
C- 30%
S- 20%
I- 30%

easton

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Re: TSP fund Allocations
« Reply #12 on: November 10, 2014, 04:05:06 PM »
BTW, I did away with having anything in the F fund because bond funds are supposed to be "safe", and you can't get any safer than the G fund. I'll sacrifice some returns and volatility of the F fund in order to guarantee my safe pile of money never goes down and i'll always have dry powder to rebalance in any stock downturns.

randommadness

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Re: TSP fund Allocations
« Reply #13 on: November 10, 2014, 05:20:17 PM »
You know - I actually like that thought on the capitalizing on downturns.

Think I'd just be afraid to have 10-20% set aside missing out on the gains normally, but dang when S recently dropped all the way down to $32 it would have been nice to jump in there with some money from a G fund stash!

easton

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Re: TSP fund Allocations
« Reply #14 on: November 11, 2014, 05:40:02 AM »
Yea it was nice being able to pick up a few extra shares in Mid October  with my G fund money when the S&P went back into the 1800s :)

Check out Bogleheads for a potential lifetimes worth of reading on different asset allocations.