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Thread: L fund question

  1. Default L fund question

    I'm 34 yrs old and plan to retire in 20-25 yrs from the BOP and I have 1 year under my belt and the whole time I used the Gfund, what would be the proper L fund to approach, I was reading more and more on this forum and i'm finding out that the #'s in the L funds mean years to retirement correct me if i'm wrong, also I changed from a Gfund to a L2040 and I think I might of chose the wrong Lfund because of retirement years. thanks


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  3. #2

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    Default Re: L fund question

    Quote Originally Posted by rcnells View Post
    I'm 34 yrs old and plan to retire in 20-25 yrs from the BOP and I have 1 year under my belt and the whole time I used the Gfund, what would be the proper L fund to approach, I was reading more and more on this forum and i'm finding out that the #'s in the L funds mean years to retirement correct me if i'm wrong, also I changed from a Gfund to a L2040 and I think I might of chose the wrong Lfund because of retirement years. thanks
    Welcome rcnells,

    Well, I think you got the L funds figured out. The L is mainly for people who are retiring or retired and their money is relatively safe from the volatility in the market.

    The other L funds represent the expected retirement (area) and base their risk depending on the duration of your planned retirement year.

    If you look at the fundsheet on tsp.gov
    http://tsp.gov/rates/fundsheet-lfunds.pdf

    You'll see that there are "expected" returns based on which one you are in. So if you are retiring in say 25 years, then the way they explain it, as your get closer to your retirement, that fund will adjust your risk from higher to lower and you don't need to watch the market. These funds "roll down" and protect greater percentage rates as you get closer to your retirement.

    Good Luck, and when you really get smart on retirement savings, would love to hear your strategy!
    THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
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    Default Re: L fund question

    Does anyone have any explanation as to why L2010 is doing the best among all funds? When all the funds are under $13, L2010 is still consistently above $13

    TIA

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    Default Re: L fund question

    Quote Originally Posted by RPM View Post
    Does anyone have any explanation as to why L2010 is doing the best among all funds? When all the funds are under $13, L2010 is still consistently above $13

    TIA
    Good question, the L Fundsheets show how each level is invested. Because the L 2010 fund is 58% invested in the G Fund it will maintain a more consistent level as opposed to the other riskier allocations. Since the G fund constantly makes a profit, and it is the highest percentage rate invested, it will weather these storms better.

    Review the fundsheets for the best explanation.
    Last edited by Frixxxx; 10-29-2008 at 02:17 PM.
    THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
    Tracker =
    Check my position

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  9. #5

    Default Re: L fund question

    Quote Originally Posted by Frixxxx View Post
    Good question, the L Fundsheets show how each level is invested. Because the L 2010 fund is 58% invested in the G Fund it will maintain a more consistent level as opposed to the other riskier allocations. Since the G fund constantly makes a profit, and it is the highest percentage rate invested, it will weather these storms better.

    Review the fundsheets for the best explanation.
    In that case, shouldn't the L income be the best? The weird thing is all the L funds are a combination of the other funds, and if all the other funds are under $13, what combination would give L2010 a higher value than $13. I'll set up a spreadsheet to figure this out when I have more time

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    Default Re: L fund question

    Quote Originally Posted by RPM View Post
    In that case, shouldn't the L income be the best? The weird thing is all the L funds are a combination of the other funds, and if all the other funds are under $13, what combination would give L2010 a higher value than $13. I'll set up a spreadsheet to figure this out when I have more time
    Over how many years is this? L2010 has a bigger loss than L income since January of this year, however L income didn't get you much of anywhere during 2006 and early 2007. That could be the issue here.
    "All the prophets of Doom, Can always find room, In a world full of worry and fear..." - Protest Song, Monty Python

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    Default Re: L fund question

    Quote Originally Posted by Silverbird View Post
    Over how many years is this? L2010 has a bigger loss than L income since January of this year, however L income didn't get you much of anywhere during 2006 and early 2007. That could be the issue here.
    L income has 5% in I fund
    L 2010 has 10% in I fund

    Add in the voodoo math of fair valuation and you can quickly come up with the influence I fund has and why these two funds (not to mention all L funds) react differently.

    When the funds were started in August 2005, there was a $.60 difference in share price between those two, now it's $1.00.

    Remember though, L 2010 came down from 15.43 July last year while the L Income fund was only 13.32. (Share price difference ($2.10)

    This shows that the L income's losses have been less than L 2010. That is why when you invest in the L funds you assume the risk/time of that fund.

    Does this make sense?
    THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
    Tracker =
    Check my position

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