Thread: TSP allocations??

Originally Posted by FSNCO

Hello all, I have just joined this board and am looking for some advice since this seems to be the place to find it. Here is a bit of history...

Participating in TSP for 2 years..currently 11% base pay and 25% special duty pay going in each month. I will increase to 15% base pay and 50% special duty pay in next 6 months.

TSP allocations are 50% in L2040 funds and 50% in I funds.

I will be making a CSRB bonus TSP deposit in 07 to max out my contributions for that year, as well as in 08. I plan on starting a ROTH IRA with some of my remaining CSRB.

HELP!!! What do you think of these allocations and any help or advice will be greatly appreciated, Soup Sandwitch.

FSNCO,
We don't give financial advice, but we can stear you in a self managed direction.
The L-funds are basically buy and hold. You should pick a L-fund based on your years to retirement. Or you may want to see the Allocations tab [Longer term Market Outlook] on the home page of TSPTalk.
When you understand buy and hold v trading, funds, risks, rewards, then you may want to develop a strategy of your own. Maximizing gains and protecting capital are some of our goals, but each individual is unique and that involves the self management of funds.
Your I-fund allocation conflicts with the purpose of the Life cycle funds, MHO.
You are more than welcome to see what we do. But please understand what we do (some trading, some buy and hold, and some things that I haven't figured out.... ), before you risk funds designed for retirement.
Have a good holiday!
Regards....and be careful.... ....Spaf

Originally Posted by FSNCO

TSP allocations are 50% in L2040 funds and 50% in I funds.

HELP!!! What do you think of these allocations and any help or advice will be greatly appreciated, Soup Sandwitch.

If you have a number of years to retirement, I'd recommend keeping it simple and allocating 100% of your funds to L2040. Currently, you're over weighting foreign (62.5% of your portfolio, less than 50% of the world's capitalization). While that worked this year, long term, most experts recommend a 40% or less foreign asset allocation.

I'd also recommend reading either Burton G. Malkiel's A Random Walk Down Wall Street or John C. Bogel's Common Sense on Mutual Funds. Either will give you the basis for formulating a long term strategy that will fit your personal need to take risk and tolerance for risk.

Welcome to TSPTalk and good luck.

Anytime you allocate to an L fund you are buying 4 different funds - it takes a long time to accumulate shares that way. Pick one fund of your choice and hit it with everything you got. That way you will gain more shares. That's how you make money and not necessarily percentages. And as a special hint no one likes the C fund - that's where I camp out at.

Ya, I noticed that the C fund seems to be giving good returns, but it isn't as popular as the others for some reason. I will keep my eyes on it.

I am looking at a max of 30 years to retirement so I have my $$ in L2040. The reason that I have so much in I funds is because of the last 5 year trend that I have seen, and all I really use for a indicator is the value of the US dollar, which seems to continually be going down.

No advice on the ROTH?? should I start that NOW, or wate untill I see some of my CSRB $$ or untill I can max out my contribution to the TSP??
It seems both have their own merit.

Roth Information
The joy of tax-free retirement income
CNN Money.com Link: http://tinyurl.com/gyrcd

However, I selected a different option. Remember some of us went through the bubble years of 2000-2003. So we elected to be our own fund managers. This site plus a few good books will give you the basics of managing your funds; risk, reward, when to hold them and when to fold them. You can't beat the ER of TSP, cause it is almost non existant. The TSP funds are some of the best index funds, for retirement. So I selected to use TSP as my primary retirement vehicle. So what do I do with my tax paid funds? Go to a Roth? Thats a good option. But now I am my own fund manager!
Internet brokers were my choice. they have IRAs, Roths, CDs, and trader accounts. The trader accounts have stocks and the new kid ETFs. ETFs have been growing like a weed! I can mirrow the TSP accounts with [IVV], [IJR], [EFA] and [AGG]. If I find a particular stock I like, I can go that way too. Buys and sells are with a click of a mouse. No 1-2 day delay there. And, I don't get no nasty letter from the fund manager that I'm moving funds in violation of the prospectus. What did I do!!! Endanger his vacation plans!!! But, you kind of have to be careful with internet brokers, they have a trade charge and the ETFs make money on the buy/ask terms. MHO, stay with the most reputable.
So, now I've submitted a different option other than the ROTH. Maybe your cup of tea, maybe not. But at least you know of a different strategy.
Allocations! How, why, when, this site has them all. This opinion, that opinion. Thats the true benefit. Members here are interchanging information. Information that others don't have.
Regards.....and be careful..... .....Spaf

bigcharts.jpg
Chart courtesy of http://bigcharts.marketwatch.com

The concept of buying and holding forever died after the stock crash of 2000-2003!

Originally Posted by Birchtree

Anytime you allocate to an L fund you are buying 4 different funds - it takes a long time to accumulate shares that way.

Think about this statement again. L-funds have shares just like the others. Depending on the fund, it could take longer or shorter amount of time to collect shares than your beloved C-fund. The only difference is in the diversity of the mutual fund holdings. Either way you could say you are buying hundreds of stocks.

Originally Posted by Birchtree

Anytime you allocate to an L fund you are buying 4 different funds - it takes a long time to accumulate shares that way. Pick one fund of your choice and hit it with everything you got. That way you will gain more shares. That's how you make money and not necessarily percentages. And as a special hint no one likes the C fund - that's where I camp out at.

Birch..you keep telling the new folk to go all in one fund because thats what you do. They don't know that you are diversified in other stocks/funds outside of TSP. Please caveat your 'buy n hold all C fund' sermons to that effect in the future Diversification goes hand and hand with BNH.

Originally Posted by Birchtree

Pick one fund of your choice and hit it with everything you got. That way you will gain more shares. That's how you make money and not necessarily percentages.

Originally Posted by FundSurfer

Think about this statement again. L-funds have shares just like the others. Depending on the fund, it could take longer or shorter amount of time to collect shares than your beloved C-fund.

Originally Posted by FUTURESTRADER

Birch..you keep telling the new folk to go all in one fund because thats what you do.

FSNCO,

I see a couple guys beat me to it but I'll throw in my 2 cents. Birchtree has been spouting this mantra for a while now but it is seriously flawed. It's like saying 5 + 0 = 5 but 1 + 1 + 1 + 1 + 1 does not = 5. Buying only one fund holds no advantage over spreading your money around unless that one fund outperforms all the others. Not my humble opinion, not even my arrogant opinion - mathematical fact.