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Thread: 45, 15 years left, wondering about best allocation?

  1. #1

    Default 45, 15 years left, wondering about best allocation?

    Hi everyone! I'm excited to have just found this forum after having spent the better part of the day reading everything I can find about rebalancing and trying to make a decision. I'm almost 45, almost 13 years in, have about 15 years left before I retire, and have been maxing out my TSP for quite a few years now - and always contributed enough to get the matching until I did. For most of my career, I've been very hand-off and always contributed 100% to the lifecycle funds - first L2040 and then L2050. As a result, my TSP portfolio today is ~56% L2040 and ~14% L2050. A few years ago, I changed my contributions a few times and finally landed on 60/30/10 C/S/I.

    Factoring in the individual fund distributions within the L2040 and L2050, my total current portfolio is distributed across the individual funds as follows:
    G - 14.02%
    F = 6.51%
    C = 41.34%
    S = 16.53%
    I = 21.60%

    I'm wondering if I should do an interfund transfer while stocks are down - get out of the L2040 and L2050 funds and take the opportunity to rebalance. Right now, given I should have a solid pension, Social Security, and cash savings, I think I'm too heavily invested in G and F and definitely don't wish to become even more so as the two lifecycle funds rebalance to get more conservative over time. I think I'm also too heavily invested in I because of the lifecycle funds.

    I can stomach watching my balance go down (maybe even considerably) given it will very likely recover and then some. Still, I'm having trouble ripping off the band-aid because it's a sizable portion of my portfolio that I would be shuffling around. I'd really welcome input from those more seasoned at this sort of thing than I am re: recommended allocations, whether it makes more sense to divest the L2040 and L2050 over time or quickly, etc.

    Thanks and nice to be here!


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  3. #2

    Join Date
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    Location
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    Default Re: 45, 15 years left, wondering about best allocation?

    You have to do what you are comfortable with. I am 48 and can retire at MRA. For me, personally, I will try to time the market occasionally but plan to spend the majority of my time invested 50C 50S, right up to the day a meet my maker (I hope I meet him).

    Even in retirement I’ll stay C&S, keeping several years of cash on hand. I guess this is the buckets of money strategy. The market goes down, yes, but it has always gone higher and higher since as long as I can remember.


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  5. #3

    Default Re: 45, 15 years left, wondering about best allocation?

    Welcome mayfly!

    I'm not the one to ask about a by and hold strategy. I, and many folks here, are more about timing the market so I find myself often being 100% in the stock funds, or 100% out, although there are times when partial allocation are better, but I digress.

    Re-balancing after big moves is a good strategy if your allocation is out of whack because of that move. If you're thinking of adding exposure to stocks, you can add slowly or all at once, depending on if you think this decline is over or not.

    Bets of luck, and thanks for joining us!

    Tom

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  7. #4

    Join Date
    Mar 2006
    Location
    Raleigh, NC
    Posts
    3,085

    Lightbulb Re: 45, 15 years left, wondering about best allocation?

    Mayfly,

    I'm not the pure market time many in these parts are, but I have moved around my allocations to some extent.

    You seem to have a very good handle on how the Lifecyle funds map into the individual funds. I think you are spot on regarding G/F to some extent - although the allocations you present are not horribly conservative. Think of the G Fund (in particular) as a cash holding that can be used aggressively during a market bump - or long term market advance. We seem to be in both situations today.

    On the other hand, as I write this at 1212 EST you will miss a big chunk of the early correction correction. What I mean by that is that to get today's bounce you had to make the IFT trade Friday before 1200 EST. The trades take place at COB if done before 1200. I think - the market has been so good for so long my brain is in overdrive - IFTs that occur after 1200 EST take place at COB the NEXT day. So, if you do an IFT now you will not get the benefit till Wednesday morning. Ugh.

    Now, my market timing is usually pretty good. I had a market timing cat that gave me great advice. She, regretfully, passed away last year and my new cats (don't ask about the plural - what a fiasco) have absolutely no feline feel for even major market moves. I flubbed this bad. Went from 65% C/S/I to 75% C/S/I at COB Monday. Market dumped for two days - ate it. Then was dumping on Friday. Lost my sticky pants and whimped out to a 50% C/S/I allocation - just in time to miss Fridays EOD smile and todays rebound. But, what I am saying is that even a schlub like me can make money while schlubbing. My 50% equities and 20% F will still net me great returns today if things continue. And, if the old pattern persists I will be been buffered.

    Because I AM a schlub I use three (Aggressive, Normal, Conservative) allocations. I do not (generally) move all in/all out. But that is me. I sleep well.
    Lookin' up at the 'G Fund'!!!

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  9. #5

    Default Re: 45, 15 years left, wondering about best allocation?

    Thanks, everybody, for your input! I decided to do this in two steps - for no good reason except to make myself feel more comfortable. Step 1 was transferring all L2040 (which was most of the amount I intended to transfer) to join some of my other money in L2050.

    Next, I'll take all L2050 and have it join the rest of my money in the individual funds at my desired allocation... which I'm still toying with. Once I get through current work madness, I might start playing with some degree of timing... but for now I'm being mindful of the limits of my mental and emotional bandwidth and am going to buy and hold.

    Quote Originally Posted by Boghie View Post
    Now, my market timing is usually pretty good. I had a market timing cat that gave me great advice. She, regretfully, passed away last year and my new cats (don't ask about the plural - what a fiasco) have absolutely no feline feel for even major market moves. I flubbed this bad. Went from 65% C/S/I to 75% C/S/I at COB Monday. Market dumped for two days - ate it. Then was dumping on Friday. Lost my sticky pants and whimped out to a 50% C/S/I allocation - just in time to miss Fridays EOD smile and todays rebound.
    RIP to your remarkable cat, Boghie. Just think if you had figured out how to breed for that trait! And sorry about your recent experience. It sounds like you're on course for a solid comeback, though - good to hear.

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