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Thread: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

  1. #1

    Default TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    Hello to all and thank you in advance for any advice and opinions you may have. I am in need of some help and am so happy to have stumbled onto this site.

    I've been saving for a good 15+ years or so, investing $630 each month into my TSP and have pretty much been going 50% into C, 25% into S, and 25% into I.

    I have $21.5K (9%) sitting alone in F with no money allocated to it. The rest of the money is 57% sitting in C, 18% in S, and 16% in I with a grand total of $260K saved.

    I kind of stuck my head in the sand and took a beating when the economy soured. I don't know if I should moved everything to G & F so I just kept everything status quo (in C, S, & I).

    It appears that S (down 7.63% for 2011) & I (down 14.90&) aren't doing very well in 2011. Should I get out of I completely? Am I foolish to sit here and take a beating in I or is the thought that it is wise to stay in because I am buying shares at a lower price in hopes they will go back up?

    Is it time to start going a bit more conservative now that I am in my mid 40's?

    I was thinking about changing it up and doing an Interfund Transfer AND Re-Allocating everything to: 25% C, 25% F, 25% S, and 25% G.

    Thoughts?
    Last edited by coastalite; 12-15-2011 at 04:25 PM.


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  3. #2

    Join Date
    Apr 2005
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    Gainesville, Florida, USA
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    Default Re: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    You'll be invested long after you retire - stay with your current program. Slow money with dollar cost averaging is the best approach. Accumulate as many shares as you can at these lower prices. When the market finally sees the light you'll zoom even faster than imaginable.

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  5. #3

    Join Date
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    Default Re: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    coastalite, This is a great place to learn. Welcome aboard. Sure sounds like you have been doing a good job so far. Good luck.
    May the force be with us.

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  7. #4

    Join Date
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    Default Re: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    Welcome to the Board coastalite!
    Best of luck.
    Norman



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  9. #5

    Default Re: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    Thanks for the replies. I was hoping to get a few more opinions on moving everything to 25% G, 25% F, 25% C, & 25% S?

    Also, would like to allocate future contributions to 25% G, 25% F, 25% C, & 25% S.

    My thinking is that in my mid 40's I can't afford to be too risky, so half my money should be in the more stable G & F, and the other half in the more risky C & S.

    As I'm getting older, I feel the need to be more proactive and keep a much closer eye on these funds, and not necessarily just sit back with my head in the sand (like I've been doing).

    If I see any indication that one fund is taking off or others tanking, I'll try to IFT my money around accordingly.

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  11. #6

    Join Date
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    Default Re: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    Quote Originally Posted by coastalite View Post
    Thanks for the replies. I was hoping to get a few more opinions on moving everything to 25% G, 25% F, 25% C, & 25% S?

    Also, would like to allocate future contributions to 25% G, 25% F, 25% C, & 25% S.

    My thinking is that in my mid 40's I can't afford to be too risky, so half my money should be in the more stable G & F, and the other half in the more risky C & S.

    As I'm getting older, I feel the need to be more proactive and keep a much closer eye on these funds, and not necessarily just sit back with my head in the sand (like I've been doing).

    If I see any indication that one fund is taking off or others tanking, I'll try to IFT my money around accordingly.
    You hit the key word, RISK. It really comes down to what you are willing to put out there. What I would say is look at how you have your allocation spread out. One thing to remember, you only have 2 IFT's for the month but you can allocate your money to different funds at different percentages twice a month if you want to, but the timing can be tricky. If you are looking for small share growth then spreading your money around is the right thing. What you might think about is putting 100% in a specific fund for a month or two depending on how well the fund is doing then move 100% into a different fund. The one place you may want to increase your shares might be the I fund. Once this Euro thing is cleared up I think the I fund will get back over $21 pretty quickly. At 25% per fund your share growth will be small but you will have less risk of large losses. I think the most funds I spread my allocation to was 3, CSI, at any combitation of 30%,30%,40%. You still have some good years to make a big impact to your TSP. Good Luck!!
    May the force be with us.

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  13. #7

    Default Re: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    If you have 20 years the G Fund is for suckers, it doesn't even keep up with inflation. If god forbid you are talking about a buy and hold strategy in a conservative fund, at least put your funds in the F Fund - AVOID THE G FUND!!!!!!!!!!!!!

    G Fund 2 June 2003 = $10.00 today = $13.80 i.e. 38% in last 9 1/2 years.
    F Fund 2 June 2003 = $9.97 today =$15.30 i.e. 53.5% in last 9 1/2 years.
    100% G Fund COB 13 March 2020

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  15. #8

    Default Re: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    Quote Originally Posted by nasa1974 View Post
    What you might think about is putting 100% in a specific fund for a month or two depending on how well the fund is doing then move 100% into a different fund. The one place you may want to increase your shares might be the I fund. Once this Euro thing is cleared up I think the I fund will get back over $21 pretty quickly. At 25% per fund your share growth will be small but you will have less risk of large losses. I think the most funds I spread my allocation to was 3, CSI, at any combitation of 30%,30%,40%. You still have some good years to make a big impact to your TSP. Good Luck!!
    Good stuff. Thanks. I am beginning to see the big picture. Maybe I'll take your 30-30-40 CSI advice. Curious, why not F? Over the last 12 months, F is at 5.68%, outperforming both S & I.

    What are your thoughts on moving it all into L2030 and walking away?

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  17. #9

    Default Re: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    Quote Originally Posted by ILoveTDs View Post
    If you have 20 years the G Fund is for suckers, it doesn't even keep up with inflation. If god forbid you are talking about a buy and hold strategy in a conservative fund, at least put your funds in the F Fund - AVOID THE G FUND!!!!!!!!!!!!!
    Yeah, I hear ya, but the G Fund since inception is 5.93%. F since inception isn't much better at 7.09%.
    Since inception, I is the WORST at only 4.43%, but has only been around since May 2001.

    If looking long term, based on rate of return since inception, C is the best at 9.55%.

    Why not just go 100% C if it's showing the best rate of return over the long haul?


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  19. #10

    Default Re: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    Quote Originally Posted by FireWeatherMet View Post
    Judging from your statement, you seem to be asking for the long term stability that the L-Funds already provide.
    If you're going to work till age 60-65 and want to have a steady allocation that you might only change infrequently (less than 3 times a year ) then going into the L2030 might meet your longer term goals.

    If you want to stay more aggressive, and learn how to manage your money at the same time, the best thing to do (what I did) was sign up for one of the pay services from this site who typicaly shift you from 100% stocks to 100% G and/or F based on a variety of time proven statistical and heuristical methodology. You can ask Tom (who runs this site) more about them, or read about them on the main homepage.

    At the same time, reading Tom's daily wrap up every evening (also on the main homepage) is a great way to learn on the fly. And when one of the premium service gives you a buy or sell signal you can follow what some of Tom's (or Coolhands, JTH's) charts are showing and follow along. You will likely start seeing patterns developing and you can then (on the side) start making moves on the side on Tom's Autotracker and see how your new found skills are shaping up to what the pay services (or the L Fund) are doing for you. Read the blogs and the forum posts here...engage in debate...great places to learn form others (or share what you've learned).

    After some time, you may feel your tools are sharp enough to go out on your own. Or you might like the returns the pay services or the L Fund provides.

    Question... what do the L Funds have against investing in the F Fund? For example, L2030 starts F at 9% and then 25 years later it slowly ends up at 6% in F. I didn't think F was that risky, so why end up at only 6%?

    Another problem I have with L is how much of a percentage is invested in G. For Jan 2012, it is 23.15% going to G. Do I really want that much sitting in G when that money could be missing out on serious growth in C S or I?

    What if I were to loosely follow the model of L2030, but do it manually with my own tinkering? If you go to the tsp site you can adjust the slide on the L2030 pie chart to see what the % invested in each of GFCSI at any given qtr all the way up to 2030. Jan 2012 for example is (GFCSI) 23.15/8.35/35.40/13.40/19.70. I was thinking it should be more on S and F, and less on I and G. Thoughts?

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  21. #11

    Join Date
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    Default Re: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    Coastalite,

    I didn't respond because I thought FWM's response was on target. And, anyone who has perused these boards knows that I am rarely silent on FWM commentary.

    Anyway,

    • Prior to more advanced investing I strongly recommend Ric Edelman's and Ray Lucia's books. They are on personal finance rather than investing. They explain risk and asset allocation and long term investing strategies. I especially recommend 'The Truth About Money', the 'Lies About Money', and 'Buckets of Money'. You will learn why the allocation to the 'F Fund' reduces as you get closer to retirement age. But, why not answer that question...
    • The 'F Fund' - and in fact all the F/C/S/I Funds have risk. The 'G Fund' has no risk. When you move the little slider bar on the L2030 Fund to the right you are actually moving into the future and closer to retirement. Magic. If you watch closely the F/C/S/I Funds all shrink and the 'G Fund' increased in allocation ratio. At 60 years old (at about 2025 I guess since I think you mean to retire at age 65) you are 50% in the cash/bond funds (G/F) and 50% in the equities funds (C/S/I). Right now, the L2030 fund is 31% G/F and 69% C/S/I. Basically, the L Funds get safer as you near its final date. They do not market time or change allocation based on charts or whatever.
    • So, after reading the above, a person with a 50% bond (G/F) allocation is investing like a sensible 60 year old. You sound like a sensible 45 year old. If you are not advanced enough (yet) to use technicals and fundamentals to trade at the edge than you are limiting your retirement severely. I use Quicken Premier to attain the 'Expected Return' and 'Expected Risk' noted below for you allocation and the L2030 allocation in 2025:
      1. 25% G / 25% F / 25% C / 25% S : Expected Return = 4% / Expected Risk = 7%
      2. 43% G / 7% F / 27% C / 8% S / 15% I : Expected Return = 4% / Expected Risk = 5%

      As you can see, a scientifically allocated portfolio generates the same expected return at significantly less risk.
    • As you can see, you will be scaping Alpo from a rusty can if you invest long term like a 60 year old when you are 45. If you are not following a trading method - and thus holding a bit in reserve till some market tells you to get back in - than you will not have a rewarding retirement. At 45 you should spend as much time in equities as you can with as much allocated toward equities as you can stomach.


    Finally, unless you have the skill - and luck - to implement technical trading don't worry about day or week trading. Try instead to get a read on the big moves. For example 2008 wasn't really a mystery and 2009 (from maybe May onward) wasn't a shock. Who really cares about October 23 2009 or whatever. But, you might care about October 2008.
    Lookin' up at the 'G Fund'!!!

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  23. #12

    Default Re: TSP strategy for mid 40's with 20 years till retirement. Anyone? Bueller?

    Quote Originally Posted by Boghie View Post
    • The 'F Fund' - and in fact all the F/C/S/I Funds have risk. The 'G Fund' has no risk. When you move the little slider bar on the L2030 Fund to the right you are actually moving into the future and closer to retirement. Magic. If you watch closely the F/C/S/I Funds all shrink and the 'G Fund' increased in allocation ratio. At 60 years old (at about 2025 I guess since I think you mean to retire at age 65) you are 50% in the cash/bond funds (G/F) and 50% in the equities funds (C/S/I). Right now, the L2030 fund is 31% G/F and 69% C/S/I. Basically, the L Funds get safer as you near its final date. They do not market time or change allocation based on charts or whatever.
    I understand in principal how the L Funds work, but since I am not knowledgeable enough to IFT from week to week or month to month, I am leaning towards just putting everything in L2030 and walking away. I'm beginning to understand why the L Funds don't invest a little more in F. I know F does have some risk, but looking at it since inception, it appears to be somewhat of a safe investment, with no big losses from year to year. Take 2008 for example, CSI all took a beating, but F gained 5.45%. Would it have been better to be 100% in F for 2008, or weather the storm and stay in C,S, & I and buy in at lower share prices in hopes of rebounding and bigger future gains???





    Quote Originally Posted by Boghie View Post
    So, after reading the above, a person with a 50% bond (G/F) allocation is investing like a sensible 60 year old. You sound like a sensible 45 year old. If you are not advanced enough (yet) to use technicals and fundamentals to trade at the edge than you are limiting your retirement severely. I use Quicken Premier to attain the 'Expected Return' and 'Expected Risk' noted below for you allocation and the L2030 allocation in 2025:As you can see, a scientifically allocated portfolio generates the same expected return at significantly less risk.



      1. 25% G / 25% F / 25% C / 25% S : Expected Return = 4% / Expected Risk = 7%
      2. 43% G / 7% F / 27% C / 8% S / 15% I : Expected Return = 4% / Expected Risk = 5%

    I should probably just go with L2030 and be done with it.



    Quote Originally Posted by Boghie View Post
    As you can see, you will be scraping Alpo from a rusty can if you invest long term like a 60 year old when you are 45. If you are not following a trading method - and thus holding a bit in reserve till some market tells you to get back in - than you will not have a rewarding retirement. At 45 you should spend as much time in equities as you can with as much allocated toward equities as you can stomach.

    I'd rather not eat dog food if I can help it, so I better follow the age appropriate investment strategy.



    Quote Originally Posted by Boghie View Post
    Finally, unless you have the skill - and luck - to implement technical trading don't worry about day or week trading. Try instead to get a read on the big moves. For example 2008 wasn't really a mystery and 2009 (from maybe May onward) wasn't a shock. Who really cares about October 23 2009 or whatever. But, you might care about October 2008.

    Thanks for all your advice!

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