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Thread: C-fund

  1. #1

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    Many sources have told me that the best way to manage your tsp account if you have 20 or more years of federal service to go is to dump everything in the C fund, 100 % allocation as well as full balance of interfund. And.....to leave it alone no matter what until your last couple of years before retirement. Is this crazy? Help, I don't know where to put my money in the tsp???
    "The time to buy is when there is blood in the street"
    - Warren Buffett


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  3. #2

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    Welcome stebbins777! I'm surprised this post has been out there for over 2 hours without a response because we all think we know what we're doing when it comes to allocation. This site is almost entirely about that subject so if you hunt around (use the search feature up top) you will find many theories.

    The truth is staying invested (in C fund or other stock funds) for the long term may be the best idea for some. Diversifying a little into bonds may ease some pain during down turns. What we do here is try to do better than the market. It is very tough on a day to day or week to week basis but I think recognizing major trends, up or down, and adjusting your account accordingly can give you better results. You won't beat the market (S&P 500) every year, but overall I believe it can be done, mainly by sidestepping long bear market periods.

    Again it is difficult and may not be worth your time to try. But the work can be rewarding if you look at your returns 5, 10 or more years from now.

    Thanks for joining us!
    Tom
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

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  5. #3

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    Thanks tom. I check my balance often and last month it was 27k and change. Last week I checked it and it was 26K and change. Don't like it when that number goes down. Then I checked the rates of return and the c-fund was down a little. Don't like to see those numbers in parenthesis either. But when the S&P is a positive, I win. Your right, It's the long term trend I should follow.

    What about interfund transfer, what's your opionin on where our balance should be and how is that balance affected? Easy on the tech-talk.

    Thanks again,

    Dave
    "The time to buy is when there is blood in the street"
    - Warren Buffett

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  7. #4

    Join Date
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    stebbins 777- This is only one opinion, but I would like to offer it. I have been in the market as an investor since-would you believe 1973. Seen it all-done most of it.

    Unfortunately you really don't, at this point, have enough to make any difference in the trading arena. A lot of work and time necessary to just generate meager gains or none at all. Tom has offered you some good sensible advice. No one likes to loose money, but sometimes it goes with the game.

    However you should be able to hold the C fund up through sp500 of at least 1600 on the index. This could possibly take several years. I will tell you why the C fund is prepared to outperform the other funds that are available to you.

    Perhaps you have heard of technology mutual funds? At one time period in investing they were all the rage and many fools (forgive the term) fell for the hype before the bubble broke-and many most likely will never return to the markets. Who and what to trust.



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  9. #5

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    stebbins 777-part 2. Back in1997 if you had invested in an average technology fund with 10K by the year 2000 you would have made 50K, this sounds good but it was a fool's game. The companies in the nasdaq index had no earnings just lots of press hype. The moral of the story is don't follow the Hurd unless you are attached to the 173 rd Airborn Division. Inside joke.

    The technology stocks (nasdaq) started breaking down early in year 2000, this happened several times-corrections-, each time it was regarded as a correction. almost like what is now happening to the C fund-only the circumstances are different. Each time the index or mutual funds corrected the folks continued buying and a recovery ensued. This happened for 3 different times-each time buying came to the rescue. As the sun was now shining on a succesful pattern along comes correction number 4, here come the buyers, only this time the index went into a steep waterfall decline and all the folks were trapped. Money was really lost and heads rolled. That 50K was now worth less than 10K. The index went from a high of 5048 to a low of around 1000 and under in year 2002. In 2003-2004 the index staged a 50% increase back to 200 on the index. This year it is leading to the downside in our current correction. Come back in year 2010.

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  11. #6

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    stebbins 777-part 3. Shall I continue on to the sp500-it makes for a heartening story and I promise there is a point to be made. The sp500 acted during this time frame as though it was hardly alive. Just the game for me-I'm a contrarian-and don;t follow the hype. Saved my skinny during those years. And now you have what I think will be a golden opportuniy to invest you money and actually have exceptionally good odds at making some real money.

    The 10K invested in the sp500 in 1998 went to 15.5K by the peak in 2000 of 1527.46. Doesn't seem like much but here comes the good part as a long term investor. There was actually minimal pain delivered during that cycle-it was just fine as a strategy to ride it out. If a tsp participant had been buying the C fund during this time period every payday on a dollar cost averaging basis they would be more than prepared for the next big leg upward, which I happen to think is presently on the way. In 2002 the money was back to 10K and the sp500 bottomed slightly under 800. Today it is around 1180. The solid dollar cost averaging investor would have plenty of units now and would be ready to participate and continue to participate over the distance making green all the way. Keep the money coming and you will learn more about risk taking and investing. The sp500 is the place to be

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  13. #7

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    stebbins 777-part 4. Almost done. The sp500 has real earnings from well established stocks as well as increasing dividends that continue to grow. The longer the sp500-C fund- takes to reach new highs the better off you are-you have a long time to build your asset base and increase your number of units. A good safe plan would be to allocate all recent funds to C fund and then divide your payroll contributions going forward 75% C fund and 25% I fund. Then sit back and hope the sp500 doesn't go up too fast.

    The I fund is another whole new story taking into account the German Xetra DAX and the Japan Nikkei 225 along with the DJ STOXX index of 600 European companies. Don't stress about the American dollar, just accumulate the units. I'm trying to draw out some of the I fund people who are having a hard time seeing the forest because of all the trees-step back some guys. Dennis

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  15. #8

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    First, let me apologize for getting back so late to your response. Thanks for the help. I think I will stick with my 100% c-fund allocation and 100% interfund. Because my balance went up about 4k in 2-3 months. How? don't ask me, I don't know how the economy works? That's why I get lots of advice from intelligent investors and then compile the average of it, and go with it. And since I joined the govt., everything has led to the C-fund and leave it there until a couple years until I retire and then lump it in the G. Something like that. Thanks again, Dave
    "The time to buy is when there is blood in the street"
    - Warren Buffett

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  17. #9

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    stebbins777, I hope you don't mind my tagging on to your thread. But I wanted to ask BT a couple of other (probably dumb) questions about being 100% into the C-fund.

    BT, The 4-parts that you posted above seem pretty much straight forward, but I have a few questions running around in my head, so I just have to ask.

    -Isn't getting into theS&P in the 1200 range a little on the high side?

    -If we're in 100% "C" is there a certain number to pull out or do we ride it all of the way to the very bottom? I assume the number of shares picked up is the reward for riding it down.

    -Let's say that the ride to the bottom occurs about 2010-2015, and the plan was to retire 2015-2020, if the bottom has not come back up to where the buy in was, I'm guessing that retirement might need to be postponed to a later date?

    I just want to be as ready as possible to ride this bull and to be ready to take the lumps if the high risks clobber me somewhere down the road.

    Anyone else that might have some light to shed on the subject please jump in.

    Thanks, Stebbins777 and BT,

    Steve




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  19. #10

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    Dave,

    I just realized I hadsent a response to your loan question. No big deal. I just feel awkard since I've never participated in any kind of a chat room before, which I think that is what this is. It's been a great source of information from all of the members and even some of the feuding thatoccursadds some humor to the forum.

    Steve

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  21. #11

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    First of all, when I don't know a whole lot aboutsomething, I ask people who do. So when I joined the tsp in 1999, the advice I got was to start with everything in theC-fund and ignore it untill you retire. As the years went on, I continued to ask people, in fact, I actually took someone's advice and moved my money around a little. But a little bit here and a little bit there does not maximize your return, I don't think. So what did I do, I continued to ask people again, and I received the same response from many diverse people who knew more about the market than me? C-fund and ignore untill you retire. But,,,,,,,who expected 9/11/01????? When the c-fund hit rock bottom? right after 9/11/01, I dumped all into the f-fund for a couple of years untill the C-fund started to come back. Then back in the C-fund. Now, I am at 100% C-fund, allocation and interfund. But I am considering putting a little into the S.

    God Bless,
    "The time to buy is when there is blood in the street"
    - Warren Buffett

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  23. #12

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    Stebbins777,

    If you want to go with an all domestic, passivestockallocation, you might want to consider 79% C Fund and 21% S Fund. That reflects the total domestic stock capitalization, i.e. large caps, mid-caps, and small caps. In addition, historically, small/mid-caps have outperformed large caps.Therefore, over the long term, including the S Fund shouldincrease your returns without increasing your risk.

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