TSP Fund Distribution

[guest]

I am a government employee who is trying to survive this nightmarish market but make a dollar or two from my TSP. “TSP” allows five basic funds to invest in: G, F, C, S, and I. The G-fund is guaranteed to not lose money but is also very limited on what it is earning (Government Securities Investment Fund). The F is a Fixed Income Index Investment Fund, the C a Common Stock Index Investment Fund, S a Small Capitalization Stock Index Investment Fund and the I, an International Stock Index Investment Fund.

My question, how would you distribute your funds with these choices? I took a good size hit last year and jumped out of the C, S and I (30% in each) for the security of the G using the philosophy that I am in my last years and I cant replace it. Now I am considering that I may leave the money in the fund after retirement and use a monthly draw to supplement my retirement (retire late this year). That of course means I need to do a little management!

Any input is greatly appreciated!

 

[kaudrey]

Hi Guest,

I'm a federal employee also. We'd need more information about your financial position and your risk tolerances (which seem low, based on your decision to get rid of all of your stock funds) to try to provide guidance.

For example:

Is the TSP your only source for retirement income (besides your pension)?
Are your FERS or CSRS (meaning - how big will your pension be, and what percentage of that will cover your living expenses in retirement?)
How old are you, and how many years do you have for retirement?

In general, by jumping out recently, you have "sold low", after a year or two of buying high. Probably not what I would have suggested, but what is done is done.

Also in general, that your retirement portfolio should have some percentage of stocks in order to try to keep up with inflation (by having everything in the G fun, you avoid investment risk but are subject to inflation risk - that your money won't grow enough to support you in 30 or 40 years). Now, if your pension will cover your living expenses and the TSP money will just be sitting there, then this isn't as big of a concern.

I'd try to figure out what percentage of stocks you would be comfortable with, and split that amount between the 3 stock funds (taking into account, of course, any other investments, such as IRAs or brokerage accounts). The allocation should be portfolio-wide, not just the TSP.

I hope this helps a little to get you started. We need to know more about you to try to be more specific.

Karen

 

[Bimmerbill]

Don't overlook the L funds either. They do all the balancing for you.

 

[jazz4cash]

I took a good size hit last year and jumped out of the C, S and I (30% in each) for the security of the G...............

I am confused by this statement because these funds returned 5.54, 5.49, and 11.43% respectively for 2007. Are you referring to the market's decline since mid-October?

 

[martyb]

I moved my TSP funds back & forth between the L-2040 fund and 100% I fund 3 or 4 times last year and ended up with 9.23% for the year. Not as good as my 14.58% in '06, but I'll take it! Now, for this year so far, things aren't off to such a great start. I'm hangin' in there, though.

 

[guest]

30% misunderstanding

jazz4,

Sorry, I see where my statement may have been misleading. I didn't mean I took a 30% hit on the three funds, I was saying I had 30% in each fund. My losses were to the tune of 40K for the three before I choked and bailed!

 

[jazz4cash]

jazz4,

Sorry, I see where my statement may have been misleading. I didn't mean I took a 30% hit on the three funds, I was saying I had 30% in each fund. My losses were to the tune of 40K for the three before I choked and bailed!

Ok...I did not mis-interpret that part....just wondering why you said you 'took a hit last year' when the full-year results were positive. So...I think it could still be that you are looking at the peak-to-trough dollar decline in your accounts.........me too, but I am trying to avoid the temptation to make any major changes. The individual TSP funds seem to be performing as expected.

I also need to study-up on the L funds. I peeked at them awhile back and noticed the L-income fund was outperforming the regular fixed fund (F?)

 

[ChemEng]

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[guest]

a few facts

Karen,

To answer a couple questions:

“Is the TSP your only source for retirement income (besides your pension)?”

Yes. I have a pension, social security and this TSP. The land I have is meant to pay off my house and give me some extra funds at hand. If they worked out I might need short term stuff to keep that money from just sitting idle.

“Are your FERS or CSRS (meaning - how big will your pension be, and what percentage of that will cover your living expenses in retirement?)”

I am FERS and I figured that to live exactly like I am now, giving my DW 100% survivor benefits where possible, I would need to draw the interest off my TSP to keep the status quo. Plus, I do projections with inflated numbers so I might be overestimating my needs. Well to be honest, I hope I am underestimating my income and overestimating my expenses!

“How old are you, and how many years do you have for retirement?”

I am 55 and have until December….Christmas to be exact! That is unless something big changes between here and there.

“In general, by jumping out recently, you have "sold low", after a year or two of buying high. Probably not what I would have suggested, but what is done is done.”


I do realize that I should have stayed and that I hurt myself by being so weak kneed!

 

[yakers]

I am 85% in the L2010 and 15% I, (until recently, really liked the I Fund). I will either leave it that way or move it al into the L Fund when I retire in two months. I will also move part of my TSP to a Vanguard IRA to capture some asset classes (REITs, commodities, foreign bonds or whatever) that are not covered by the TSP system. I don't see much value in trading between the TSP funds. I would have bailed out of the F Fund when it actually made a significant contribution to the L Fund. Ultimately the L funds turn into income funds over time, just when I want them to, so I don't see any reason to change that. Always keep something in the G fund, great risk reducing fund.

 

[guest]

aggressive?

You are retiring in 2 months and have done what I was trying to do with my year and a half or so a while back. Be aggressive and take advantage of the nice returns (good job and stick withit IMO). After some mid-year dips, I just could not see losing any more money and missing the retirement target date. And, minus this big hiccup going on the last couple months, I could have made my losses back....maybe>