Author Topic: TSP Question - Moving from Lifecycle to C and S Fund  (Read 322 times)

thebattlewalrus

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TSP Question - Moving from Lifecycle to C and S Fund
« on: March 17, 2020, 10:23:54 AM »
I need a sanity check or slap in the face. Spouse and I (even before the economic downturn) have been planning on breaking up her Lifecycle 2040 into moving it into 75% C and 35% S. The L funds are not aggressive enough for her taste and want to better mirror an index fund.

Current allocation in the L 2040:

G Fund 20.57%
F Fund 7.68%
C Fund 35.88%
S Fund 10.76%
I Fund 25.11 %

I think it would be smart to do this now, basically move from the L 2040 fund, break it up and reallocate what was in the G, F, and I Funds into the C and S Fund. I would not really be locking in losses with the downturn, and if anything may be beneficial once the market rebounds.

Is this line of thinking correct? She has roughly 22 years until retirement, and currently has $150k in this account. Max allocation $19,500 per year.

RainyDay

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Re: TSP Question - Moving from Lifecycle to C and S Fund
« Reply #1 on: March 19, 2020, 01:19:10 PM »
Essentially you're asking whether to move to a 100% stock allocation.  (I assume you meant 25% in the S fund, rather than 35%.)  That's entirely up to your risk tolerance!  If you're good with a 100% stock allocation, I personally think now is as good a time as any.  You'd be moving approximately $40k from fixed income and government securities into stocks. 

Just today I moved some $$ from both fixed income and govt securities into my C and S funds, and I recently changed my contributions to 100% C and S.  Yeah, I'm wondering if I'm crazy, and it will feel that way if/when the market continues to slide. 

The advantage to being in the Lifecycle funds is that it automatically rebalances for you.  The disadvantage is that it leads to the temptation to tinker with it during times like these.  Or the tendency to forget to rebalance.


Joe Schmo

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Re: TSP Question - Moving from Lifecycle to C and S Fund
« Reply #2 on: March 19, 2020, 02:30:23 PM »
I recently really took a look at the S Fund and felt that it was bullshit. I guess all along I was thinking it was kinda a small-cap fund but it's just everything except the S&P. I could be wrong but I don't think so. You do you.

MustacheAndaHalf

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Re: TSP Question - Moving from Lifecycle to C and S Fund
« Reply #3 on: March 19, 2020, 02:47:00 PM »
The S&P 500 holds 80% of the market cap of the U.S. market, which I believe is the "C" fund?
The "extended market" includes all mid- and small-cap stocks.  Although there's 3,000 of them, they only account for 20% of the stock market investment.  That's the "S" fund?

Using 75% C and 25% S is a fairly accurate way to come up with a low-cost total stock market fund.  The government funds have extremely low expense ratios.  So I'd say it's a good combination.

According to etfdb's data on Vanguard Total Stock market, the U.S. market has fallen -30% in the past 4 weeks.  So I'd agree it's a good time to sell bonds and buy stocks.  Moving from a life-cycle fund to 100% stock should accomplish that.

And you've got over 20+ years to wait for a recovery.  When things have recovered, you can always switch back to the lifecycle fund.

the_fixer

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Re: TSP Question - Moving from Lifecycle to C and S Fund
« Reply #4 on: March 19, 2020, 03:23:30 PM »
Why not C,S and I?

Is there a reason you are skipping international?


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Peachtea

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Re: TSP Question - Moving from Lifecycle to C and S Fund
« Reply #5 on: March 19, 2020, 07:28:45 PM »
Iím 20% I, 60% C, 20% S. When I learned about asset allocations and etc. a few years ago, I switched out of L fund for that allocation. I also felt the L fund was too conservative, especially for my age, then ~27. I have noted in my ISP that about 75/25 or 8/1 C/S = Total stock market fund. I believe I got that from bogleheads.