TSP G Fund

[trixs]

Hello All,

I have a quick question regarding my portfolio. Currently 65% of it is taxable and the rest is in the TSP and a Roth IRA. My bond allocation is at 22% and the majority of it is in Vanguard Total Bond ETF (BND). At the moment I have the same allocation in each account instead of having bonds only in a Roth or TSP. Originally my thinking was that it was better to allow tax free accounts to grow on par with my taxable accounts.

In our current interest rate environment would you move your bond allocation exclusively to the TSP G fund? When interest rates rise this fund should do really well.

 

[timo2]

That is what I did, after some research "The way the interest rate is calculated on the G Fund, along with the Board’s policy of investing exclusively in short-term maturities, gives TSP investors the advantage long-term rates paid on Treasury notes for short-term securities" Understanding the TSP’s G Fund : FedSmith.com

Although the G fund has attracted some unwanted attention lately "Those recommendations include aligning the G Fund “with an appropriate risk profile,” according to the committee report on the concurrent resolution, which the House passed on March 25." Congress Doesn’t Have Appetite For Messing with the G Fund, Senator Says - Pay & Benefits - GovExec.com

 

[trixs]

I did not know that. The change would make the G fund all but useless. If that was passed I suppose we could always just reallocate the portfolio again.

 

[timo2]

I did not know that. The change would make the G fund all but useless. If that was passed I suppose we could always just reallocate the portfolio again.

We could reallocate if and when that ever happened. It would not be overnight. It is hard to figure why they would mess with it, but politics is beyond the scope of this forum.

 

[donheff]

My TSP is entirely in the G Fund. It is a minor part of our portfolio and comprises a bond portion and, simultaneously, a cash reserve since it can't lose absolute value.

 

[W2R]

My TSP is entirely in the G Fund.

+1, mine too. The rest of my bond allocation is in taxable accounts at Vanguard. Access to the G Fund is a major part of our benefits package as federal employees/retirees.

I am retired, and I am receiving equal monthly payments from the TSP. G Fund shares cannot decrease in price without an act of Congress. So, for me this simulates an additional pension, to supplement my (tiny) FERS pension.

They have been talking about changing G Fund risk for decades, just like they have been talking about changing federal pension/annuity computations to high-5 instead of high-3. These bills/proposals give politicians brownie points with non-feds but they never seem to go anywhere. I see no reason to get excessively upset about it until the time if/when there are changes in place. If G Fund radically changes or disappears, there's always F Fund.

 

[Marco]

Except the fact that a new budget proposal slashes the returns form this fund and renders it nearly useless.



http://www.fedsmith.com/2015/03/24/will-a-new-budget-cut-g-fund-interest-rates/

Marco

 

[timo2]

More on the G fund proposal issue from Tammy Flanagan
Don’t Mess With the G Fund - Retirement Planning - Pay & Benefits - GovExec.com

 

[martyb]

I'm a retired fed, CSRS, for 9 1/2 months now. I recently reallocated my TSP account to 30/30/40 C/S/F. I haven't begun taking withdrawals yet.

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[nash031]

In our current interest rate environment would you move your bond allocation exclusively to the TSP G fund? When interest rates rise this fund should do really well.

Regardless of interest rate environment, this is exactly what I do.

 

[timo2]

Something new to pay attention to regarding using the G fund to fund the highway bill.

"But Hatch also said that about $30 billion worth of the Senate offsets — enough to fill the highway gap for maybe two years — would come out of the retirement program for federal employees."

There is some concern that this move may decrease the rate of return.

Senate GOP brushes aside House highway bill | TheHill

 

[Dog]

DH is planning to move his TSP funds to G fund when her retires next May and just tapping into the interest it generates of the balance as another source of income to add to his smallish FERS. I guess it will depend on what happens to the fund.

 

[martyb]

Still haven't started TSP withdrawals yet, but I have reallocated to 50% S, 25% C & 25% G funds. I'm contemplating my withdrawal strategy.....

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[kitesurfer2]

i have 50% in L2050, 25% in C, and 25% in S. Thinking of moving my 2050 to 2020. G fund will preserve assets but they won't grow much.

 

[haloFIRE]

0% in G

Slightly different take than most on the utility of the G fund and bonds in general based on my situation.

I'm considering my active duty retirement as the bond component of my portfolio (when I retire). This "guaranteed" income will cover most of my retirement needs, so I am very comfortable investing the majority of my money in stocks, and the TSP C and S funds.

Does anyone else share this method of thinking?

Am I missing something and selling myself short by not taking advantage of the G fund?

 

[nash031]

Slightly different take than most on the utility of the G fund and bonds in general based on my situation.



I'm considering my active duty retirement as the bond component of my portfolio (when I retire). This "guaranteed" income will cover most of my retirement needs, so I am very comfortable investing the majority of my money in stocks, and the TSP C and S funds.



Does anyone else share this method of thinking?

No, that's largely what Nords recommends in his book, and pretty much what I do. We are 85/15, however, but probably won't dip below that. The 15 is almost entirely G.

 

[surferLife]

i have 50% in L2050, 25% in C, and 25% in S. Thinking of moving my 2050 to 2020. G fund will preserve assets but they won't grow much.

Doesn't this mess up your allocation? I've always thought you either do the lifestyle funds 100% or not at all and create your own allocation. By breaking it up, you're defeating the whole purpose of the lifestyle funds.


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[kitesurfer2]

yea, i just mixed it up a little. my annuities are lifetime and exceeds my normal living expenses by a couple thousand per month. So since i technically don't 'need' this money i can afford to risk it a little. the other hand says play it safe with a modest 3% per year. the problem with TSP is the lag time in processing changes. I will be moving distributions as soon as the S%P bumps up a little more. at heart, I'm a sock it away and forget about it kind of guy.

 

[Nords]

Slightly different take than most on the utility of the G fund and bonds in general based on my situation.

I'm considering my active duty retirement as the bond component of my portfolio (when I retire). This "guaranteed" income will cover most of my retirement needs, so I am very comfortable investing the majority of my money in stocks, and the TSP C and S funds.

Does anyone else share this method of thinking?

Am I missing something and selling myself short by not taking advantage of the G fund?

Like Nash says, you're good.

The G fund is useful for people who aren't getting a military pension, like veterans. I guess that could also be said for federal civil-service employees who left for industry.