Thread: Monthly return rate - G

Originally Posted by Frixxxx

Interest Rate: The current rate for new loans is 1.500%, which is the current G Fund interest rate.

Up .125%

Hey G funders...you makin some money now!

That seems to actually be a largish change. Has the Fed lost control of the gubmint Bond market?

G fund.jpg

Hey Nnuut,

This is going to p*** you off. The 'G Fund' returns are identical to Social Security returns. Did you see a benefit increase this past year? How bout the year before? How bout the year before that?

Just asking

Originally Posted by nnuut

G fund.jpg

Wow, that's an ugly chart with 6 concurrently down years, with the 1.5% loan rate I'd be tempted to take out a loan and apply it to my Roth IRA.

Originally Posted by JTH

Wow, that's an ugly chart with 6 concurrently down years, with the 1.5% loan rate I'd be tempted to take out a loan and apply it to my Roth IRA.

Definitely an idea...never really thought of that!

Originally Posted by nnuut

G fund.jpg

One thing that was done was a change in policy by the current TSP guru's Greg Long and Tracey Ray that MAKES ABSOLUTLEY NO SENSE WHAT SO EVER.


That is...the thrift board, UPON THE RECOMMENDATION OF LONG AND RAY, changed the type of "G" security duration they invested in.

Prior to the change (Which kicked in back around 2008, but I am not sure exactly when. You would have to go through the monthly meeting minutes, becasue it WAs discussed then.) Anyway, prior to the change, the "G" fund mostly invested in LONGER TERM TREASURIES with terms of 20 years or 30 years. The interest rate on long term treasury notes is significantly HIGHER than the interest on short term notes.

It's not actually a 30-year treasury note like other people can buy. It's a special treasury note made just for the TSP, that is only sold to the TSP by the treasury.


Even though roughly 186 BILLION dollars is parked now in "G" fund, and even though there has NEVER been less than 42% of the total value of all funds resting in the "G" fund, there was a discussion a few years back (2008?) that went like this-

"Q:Why are we invested in long term securities?
Answer: Because the rates are higher.

Q: What if everyone wanted "OUT" of "G" and went into stocks?"
Answer: Then we would have to sell some of the long term treasuries and cash them out to get the cash to buy stocks with.

Q: Doesn't that mean we'd take a slight loss if we had to sell before maturity?

Answer: Yes, but the likelyhood of having to do that is extremely remote. "G" fund has always, for 30 years, been the single largest fund of holdings for people.

Q: What would we have to do to ensure quicker liquidity?
Answer: We'd have to invest only in very short term maturities- like 90 days or less on new investments, where the rates are much, much lower.

Q: ok. From now on, let's only invest in very short term securities, in the odd event that we ever need to liquidate in a hurry. "
Answer: You wanyt us to change policy and stop investing in 30 year bonds, and 20 year bonds, and change to much shorter time maturities?

"Yes- just do it. "



So....that's why the "G" fund rates have plummented. Along with the long-term rates going down, the "TSP" baord directed that they now invest ONLY in short term government securities at a lower rate of return, rather than long-term securities.

Why? I don't exactly know, but I presume somebody is making a kickback off of it or something.

It makes no economic sense, but that is the formal policy in place right now for the "G" Fund.

Originally Posted by James48843

One thing that was done was a change in policy by the current TSP guru's Greg Long and Tracey Ray that MAKES ABSOLUTLEY NO SENSE WHAT SO EVER.


That is...the thrift board, UPON THE RECOMMENDATION OF LONG AND RAY, changed the type of "G" security duration they invested in.

Prior to the change (Which kicked in back around 2008, but I am not sure exactly when. You would have to go through the monthly meeting minutes, becasue it WAs discussed then.) Anyway, prior to the change, the "G" fund mostly invested in LONGER TERM TREASURIES with terms of 20 years or 30 years. The interest rate on long term treasury notes is significantly HIGHER than the interest on short term notes.

It's not actually a 30-year treasury note like other people can buy. It's a special treasury note made just for the TSP, that is only sold to the TSP by the treasury.


Even though roughly 186 BILLION dollars is parked now in "G" fund, and even though there has NEVER been less than 42% of the total value of all funds resting in the "G" fund, there was a discussion a few years back (2008?) that went like this-

"Q:Why are we invested in long term securities?
Answer: Because the rates are higher.

Q: What if everyone wanted "OUT" of "G" and went into stocks?"
Answer: Then we would have to sell some of the long term treasuries and cash them out to get the cash to buy stocks with.

Q: Doesn't that mean we'd take a slight loss if we had to sell before maturity?

Answer: Yes, but the likelyhood of having to do that is extremely remote. "G" fund has always, for 30 years, been the single largest fund of holdings for people.

Q: What would we have to do to ensure quicker liquidity?
Answer: We'd have to invest only in very short term maturities- like 90 days or less on new investments, where the rates are much, much lower.

Q: ok. From now on, let's only invest in very short term securities, in the odd event that we ever need to liquidate in a hurry. "
Answer: You wanyt us to change policy and stop investing in 30 year bonds, and 20 year bonds, and change to much shorter time maturities?

"Yes- just do it. "



So....that's why the "G" fund rates have plummented. Along with the long-term rates going down, the "TSP" baord directed that they now invest ONLY in short term government securities at a lower rate of return, rather than long-term securities.

Why? I don't exactly know, but I presume somebody is making a kickback off of it or something.

It makes no economic sense, but that is the formal policy in place right now for the "G" Fund.

par for the course

We need to start a campaign to cease and desist participation in the "G" Fund.....It needs to be removed from the Congressional "Slush Fund"
fund allocation.jpg

From FRTIB Meeting room October 2012:
LINK
James' comment on what he was saying and how it is affecting all investors:
GFund-30year.jpg

Between the IFT limits, lack of a diverse spread of things to invest in, and now this; it seems like the folks who are in charge of this stuff want to see Feds on the Alpo retirement plan.

The current interest rate is: 1.625%

Another .125% increase

hmmmmmmm.......