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Thread: Less than 1 Percent Option (read only)

  1. #1

    Arrow Less than 1 Percent Option (read only)

    At the request of some friends and fellow members, I decided to make this
    thread to help others understand the meaning of a <1%IFT. We can use
    this thread to ask questions concerning this option at any time and I will
    try my absolute best the answer them in a timely manner.

    Definition: A <1%IFT is defined as a "a less then 1% Interfund Transfer".
    It is the ability to move small amounts of money within your TSP Account.
    Similar to the (L) Funds, it enables you to rebalance your account within
    percentages that are <1% either to the next whole percentage upward
    or the next whole percentage downward.

    Goal: To Beat The (G) Fund Returns for the remainder of any given month
    after utilizing all of your Regular IFT's (limited to 2 per month). Keeping
    your exposure to risk at a minimum, while maintaning focus on the events
    which affect the Market on a daily basis. (avoiding the G Fund Lag).

    *Note: Remember, you have 2 unlimited IFT's per month. However, you
    can choose to move 1% out of any Fund on a daily basis if you decide
    to do so. But the money MUST go back into the (G) Fund after your 1st
    two IFT's have been made. In essense, you could make alot more then
    three IFT's should you have decided to sell your shares over the coarse
    of time. But you CAN'T take your money out of the (G) Fund until the
    following month. Call it what you will, the (G)arage,,,,Jail,,,Lilly Pad, etc..
    One thing holds true, you can check in,,,,,but you can't check out.

    First thing to do is to check your Account Balances on the TSP Website. and write down the percentages that are currently
    displayed next to your dollar amounts. The percentages are under the
    column called "Distribution" and will look like this;

    Investment Fund Shares Share Price Balance Distribution

    (G)Fund GovernmentSecurities xxxxxxx xxxxxxxx 92.87%
    (F) Fund Fixed Income Index xxx. xxx xxxxxxx xxxxxxxx 4.05%
    (C)Fund Common Stock Index xxxxxxx xxxxxxxx 1.02%
    (S)Fund Small Cap Stock Index xxxxxxx xxxxxxxx 1.03%
    (I)Fund International Stock Index xxxxxxx xxxxxxxx 1.03%

    The percentages above are my actual numbers and were posted on the TSP website
    sometime tonight. So tomorrow before noon, I have a decision to make. Do I want to
    just leave my balance as it currently exists? Do I want to take some money out of risk,
    off the table and back to the (G) Fund? OR Do I think the market will continue to rally
    and want to take some money out of the (G) and increase my holdings in stocks.


    Wrong ! I can go to the TSP and now make a <1%IFT up to the next whole %.

    I can make the (I) Fund 2%..................I can make the (C) Fund 2%
    I can make the (S) Fund 2%................I can make the (F) Fund 5%

    Last but not least, I can make the (G) Fund 89% and thats how you can take 3.87%
    and move it out of the (G) Fund and into the other funds. But you can't do this unless
    your showing a minimum of xx.01% (example: 2.01%,,,,,13.35%,,,,57.99%...etc...)

    Thats all the time I have for now, but I want everyone to know from the start. You can
    lose money doing this method. Where in the (G) Fund you wouldn't lose a dime ! But
    in the last four days, I've gained over 6 weeks of (G) returns. If I bailed 100% into the
    (G) Fund, I would have gained practically nothing. Now I can go to the (G)arage with
    a smile (should I decide to) any time I wish. I will add more to this thread as I wasn't
    able to put it all on this page. It's a start and I hope it helps !

  3. #2

    Wink Re: <1%IFT Option

    I have just enough time to add one more thing.

    Lets say you did a <1%IFT on Monday and on Tuesday you see;


    On Tuesday the market goes up and you want to take your profits off
    the table, but you want to leave your original percentages in tact.

    Simply go to the TSP Website and enter the same exact percentages
    that you current show in your account balance.

    What ever the market gains will go back into the (G) and your
    percentages will stay the same for Wednesday. But know that
    your buying your shares back at a higher price.

  5. #3

    Join Date
    Apr 2008
    Cleveland, Ohio

    Default Re: <1%IFT Option


    I have to say thank you. You did a fine job explaining the <1% option.

    One thing to remember about the <1% option, and this is an important point. To quote SB: "This method is no guarantee of additional profit (as opposed to the G Fund)"

    Currently the FRTIB has established that all TSP participants have at their disposal the ability to move their money between funds 2 times a month.

    After you use your 2 IFT's you actually have four options:

    1) Do nothing and keep your current percetages for the rest of the month

    2) Slowly (or quickly) move back to the G fund,

    3) IF as an example you have even percentages in your funds (G20% F20% C20% S20% I20%) you can do an IFT and keep the same %'s (this move will actually increase or decrease your total shares but maintain your percentages), and

    4) Do a <1% move (to perform this move your accounts must have a .01 to a .99%) Example G20.01% F19.99% C20.25% S20.25% I19.50%. Now you can round up the FCSI funds to 20% 21% 21% 20% and the G fund will be 18%.
    May the force be with us.

  7. #4

    Default Re: <1%IFT Option

    Strong points Nasa ! I want to add one more thing.

    You can do this type of transfer, even if you have 50.03% in one fund.
    But your at such a high percentage already, it would make no sense to
    do this as part of the Goals I documented. The risk of loses are way too
    high at those levels. However, if you've used all of your normal IFT's and
    wish to buy more shares to boot, then by all means, you have the ability
    to boost the 50.03% up to 51.00% (it works the same way).

    Note: No matter how you move your money during the month, please
    remember that the first two moves (even if they're <1%) will count
    towards your 2 move restriction.

    My second move during the month will be used (normally) to spread out
    my investment over the C,S,I,F Funds as I lower my risk into the <1%
    percentages. But if I find the need to make a quick change to very
    low risk, I could go 96-1-1-1-1 and still try to beat the (G) at those

  9. #5

    Exclamation Re: <1%IFT Option

    Remember, the goal to beat the (g) fund deminishes as you get
    closer to the end of the month. That is unless your goal is
    to extend the time period beyond a month. Retirees who wish
    to beat the (g) but avoid high risk might do this, in lieu of
    putting large amounts at risk. So everyone has their own
    goals when it comes to this method.

  11. #6

    Arrow Re: <1%IFT Option

    Quote Originally Posted by WorkFE View Post
    You've created a monster. I here the Administration is going to hold a 60 day moratorium on <1% IFT Option
    I read it everday and it still confuses me. I get the concept but my grandfather used to tell me to put it down if you don't know how to use it.

    Have a great weekend.
    A while back, we had a few members do a evaluation of the method. Some
    found it helpful, some found it confusing and others found it a waste of time.
    But I still hold onto the notion that the <1%IFT Method can be better
    then being locked in (G)Hell and it opens up "options" in lieu of Jail. Even
    with todays down turn, I'm still beating the (G) Fund for March through
    accumulating 4.179 weeks worth of (G) Fund Returns, more then if I went
    directly to the (G) when I wanted to bail. But it works both ways and I
    could have lost 4 weeks instead of opting for safety.

    That's it, I just thought of it:

    If I'm convinced the market will Drop until the end of the month, then
    I consider the (G) Fund as "SAFETY".

    If I'm convinced the market can move up before the end of the month,
    then, I consider the (G) Fund as "JAIL".

    I would love to help you understand it better and invite you to PM me
    with any questions you may have. I can share the answers on the thread
    as time allows. Please feel free.

    Moratorium huh, can you imagine if everyone opted to do this instead of
    moving to the (G). Then make as many <1%IFT's as I do. They'd state
    it was "insideous behavior" and spend millions on stopping it. Since the
    restrictions were imposed, costs have "INCREASED" which was the total
    opposite of what their goal was. To lower the costs that I imposed on
    my fellow paqrticipants thru multiple IFT's. They make me sick with their
    lies and incompetence. The smoke has cleared and the mirror is reflecting
    the truth. Sorry, I get up in arms with anyone taking away my options.

  13. #7

    Wink Re: <1%IFT Option

    Did you know that on any given day, if you do a <1%IFT to increase your percentages, and the market went down on
    that day, your actually buying more shares at a cheaper price. You'll see the shares rise on the TSP Website the next
    morning. Should you do this for several days as the Market goes down, your (in essence) DCA'ing. Thats known as
    "Dollar Cost Averaging". Which means your purchasing more and more shares each time as the market goes down.
    This is why I added the Shares +/- column to the Daily Breakdown (below).

  15. #8

    Wink Re: <1%IFT Option

    Sometimes, you'll wish you didn't do a <1%IFT. Here's an example.

    Monday you start the day off with:
    90-4-2-2-2 (The Market looks down before noon)
    At Noon you do a <1%IFT (90-4-2-2-2) to keep the percentages the
    same for Tuesday. Low and behold, you get an afternoon rally and your
    percentage would have looked like this come Tuesday if you did NOT do
    a <1%IFT: 89.85%-4.02%-2.03%-2.05%-2.05%
    On Tuesday, the rally continues and you wish you had larger percentages
    working for you during that rally. If you simply wait until Tuesday, your
    percentages (89.85%-4.02%-2.03%-2.05%-2.05%) would have given
    you the ability to Jack them up to the next whole percentage by doing
    your <1%IFT on Tuesday instead of Monday. The percentages on Wed.
    would then look similar to this: 86%-5%-3%-3%-3% or any combination
    that you decided upon.

  17. #9

    Default Re: <1%IFT Option

    I added shares to the C-Fund from payday(100% C) contributions at the close on Wednesday. On Thursday, using your 1% method, I added over twice the shares, I accumulated from payroll contributions. I went from 10.4% C to 11% C and this was important, because I had used my 2 IFTS for the month.
    The method works well, for adding shares on big down days.

  19. #10

    Question Re: <1%IFT Option

    Some Basic Changes that occurs when doing a <1%IFT when the market
    finishes differently then expected;

    It's 11:30am (est.) and your pressed to make a decision concerning a
    decision to make a <1%IFT. You made one the day before and your %
    levels are 97-0-1-1-1. But today, you see the market being negative
    all morning and have a strong feeling that it will close negative too.
    Tomorrow, a major Economic Report or Earnings Report is due to come
    out at 10am and you feel it will have a positive effect on the market.

    So, What do you do ? Well, that's up to you, but here are your options;

    a) Leave your balance alone and accept the outcome.
    b) Do a <1%IFT again with the same exact percentages.
    c) Do a <1%IFT and reduce your risk in any/all your funds.
    d) Totaly bail out of the Market and go to safety at 100%

    My decision might have been (b) because I would be purchasing more
    shares cheaper as a result of a negative day today. I'd still have my
    original 97-0-1-1-1 percentages at work for the impending reports that
    were due out tomorrow.

    But what happens when your WRONG about today and a late afternoon
    rally swings the Market into a positive close? I'll be back to answer this
    and other questions soon!

  21. Default Re: <1%IFT Option

    SB, say you put in a 97-0-1-1-1 and the next day you had gains resulting in 96.7-0-1.01-1.01-1.01. The day after the gains things are looking great in the morning and you decide to up things to 94-0-2-2-2. In the evening there is a major sell off and one or more of your stocks dips below 1%. I'm assuming the <1% transaction wouldn't go through as it is now a >1% transaction? Would the stocks that did not dip below 1% still be raised to 2% or would the entire transaction be canceled?

  23. #12

    Exclamation Re: <1%IFT Option

    The answer to the previous question; "what happens if the day ends in
    the positive, when you thought it would close negative"

    If you did a <1%IFT with the same percentages, any gains you made at
    the end of the day would be diverted to the (G) Fund. I call this locking
    in some gains. You also purchased less shares at a greater price. But at
    these percentage levels, (depending on the day ending advance), the
    shares may not be that much more expensive.

    Lastly, your 97-0-1-1-1 is now less then what you would have had if
    you simply left it alone and didn't do a <1%IFT. Tomorrow, you'll still
    have 97-0-1-1-1 but you could have had;


    and that would have been more profitable if the Reports advanced the
    rally for another day. Tomorrow would have given you the abilty to Jack
    Up the percentages to the next level (94-0-2-2-2) if you held off on
    doing another <1%IFT today.

    Bottom Line: You may be right, you may be wrong. But without a doubt,
    before making a <1%IFT, you need to think ahead and weigh out all
    possibilities and contingencies. This method requires you to focus a day
    or two ahead (not to mention your established goal to end the method).
    You should ask yourself; What if the Market ends differently? What if
    tomorrow ends differently? What if I leave my percentages alone? What
    if I do a <1%IFT and boost just one fund and lower another? etc....

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