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Thread: L2050 Fund

  1. #25

    Join Date
    Sep 2008
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    West of Atlanta
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    2,580

    Default Re: L2050 Fund

    crws - I was trying to reconcile the price of the 2050 in my own mind and this is what I came up with.

    It's kinda like a stock split. Lets say you have 100 shares of XYZ and it splits. Now you have 200 shares but the $ value is still the same. I think it's the same with a reverse split. 200 shares becomes 100 shares but the total value is still the same in dollars.

    The percentage gain/loss is calculated on total value so the number of shares doesn't matter.

    I could be full of it but thats the best I could come up with...and I'm not sure I explained it all that well.

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  3. #26

    Join Date
    May 2010
    Location
    Vancouver, USA
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    1,648

    Default Re: L2050 Fund

    Quote Originally Posted by KevinD View Post
    crws - I was trying to reconcile the price of the 2050 in my own mind and this is what I came up with.

    It's kinda like a stock split. Lets say you have 100 shares of XYZ and it splits. Now you have 200 shares but the $ value is still the same. I think it's the same with a reverse split. 200 shares becomes 100 shares but the total value is still the same in dollars.

    The percentage gain/loss is calculated on total value so the number of shares doesn't matter.

    I could be full of it but thats the best I could come up with...and I'm not sure I explained it all that well.
    I like that analogy! Works for me.
    Thanks!
    'Course with the world events taking center stage, I might pack up and head for the barn, looking for lower entry-point days ahead.
    eh- decisions, decisions.

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  5. #27

    Default Re: L2050 Fund

    Good day,

    I am newer at this trading stuff and have a question that I am trying to work through in my head. Regarding the L2050, I will hopefully be way retired by then (I have 20-25 years before I can retire). Reading the posts, it appears that the L2050 could go up 5-7 dollars in the next 5-8 years. Why would you not buy it low and hopefully sell it high in 8 years if that is how long it takes. Let's say, as an example, I buy 5000 shares at $10.30 (51,500)...in 8 years IF it goes up let's say 7 dollars (as some people said it may double by that time) to 17.3 a share I would have 86500 for a 35000 gain for just moving money and letting it sit (Avg of 4375 dollar increase a year over the 8 which believe is around 8.75%). Now I know that it can always go down but for those who have 10 + years to go it seems like a no brainer as I imagine it is at least going to go up a few dollars. I would love to hear thoughts on this strategy. Thanks.


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  7. #28

    Join Date
    Feb 2007
    Location
    Manassas, Virginia
    Posts
    3,498

    Default Re: L2050 Fund

    Quote Originally Posted by Fed1 View Post
    Good day,

    I am newer at this trading stuff and have a question that I am trying to work through in my head. Regarding the L2050, I will hopefully be way retired by then (I have 20-25 years before I can retire). Reading the posts, it appears that the L2050 could go up 5-7 dollars in the next 5-8 years. Why would you not buy it low and hopefully sell it high in 8 years if that is how long it takes. Let's say, as an example, I buy 5000 shares at $10.30 (51,500)...in 8 years IF it goes up let's say 7 dollars (as some people said it may double by that time) to 17.3 a share I would have 86500 for a 35000 gain for just moving money and letting it sit (Avg of 4375 dollar increase a year over the 8 which believe is around 8.75%). Now I know that it can always go down but for those who have 10 + years to go it seems like a no brainer as I imagine it is at least going to go up a few dollars. I would love to hear thoughts on this strategy. Thanks.
    It sounds like you are giving an example of what you have heard or read in regards to the L2050 fund. You are thinking in terms of a Buy and Hold strategy. In 2008 the major in-dices and stocks on average lost 10 years worth of gains. Yes we have retraced 50% of this loss almost 3 years later.

    I personally think I can Beat the example that you have shown above by being on my toes with what is going on in the Economy and what is going on with the stock market. I myself could not and would not follow the example you have shown above for fear of another 2008 collapse.

    It is good that you are thinking of what to do with your money. You give an example of a strategy. But it is investing a certain way and turning your head Me personally, I don't have enough faith to follow it though. I have a limit to how far I am willing to slide downward percentage wise before I pull the plug and return to the garage.

    Welcome to TspTalk.com and Good Luck.

    P.S. I would Double Think the strategy you are proposing.

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  9. #29

    Default Re: L2050 Fund

    I appreciate you comments poolman. That is one great thing about these forums...everybody helping each other in avoiding potential problems and losses.

    I did do something close to what I suggested however I did keep back a lot of money that I can pour into the fund IF it goes down because I do believe that we are going to tank out soon especially with gas prices going up. Before I did what I did, i researched the L funds when they came out and when the 2008 thing happened (L2040 came out around 14.XX and when 2008 hit it dropped to 10.XX). Now I know that they can go down really low which is why I have a bunch of money sitting in reserve to either pump into the L fund or the I fund IF we do tank out to hopefully even out my loss should we tank.

    Like I said I appreciate your help and advise.

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  11. Default Re: L2050 Fund

    Does anyone else feel that TSP fund managers are "mandated" to place a higher percentage into US large cap (C fund) for all of their L funds than any normal fund manager would? It seems like Govt wants to help those companies recover, when they are the reason for the last big crash. Small caps are more flexible during recessions and have far better accounting practices when running a business. As of Dec 2, 2010, S&P 500 debt was figured at $7.25 trillion, so I see no justify for why TSP is forcing a larger percentage of your funds to be invested in the C fund. I wouldn't place a dime in the C fund until Corporate America and the Fed clean up their act before another crash occurs.

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  13. #31

    Join Date
    Oct 2007
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    Default Re: L2050 Fund

    Since the "L" funds are for those who do not manage their TSP accounts and more or less is the alternative to parking in G or parking in C, the higher highs and lower lows of the S fund are beaten out by the C fund's less volitile actions - or at least that is the theory. If you want to manage your funds at all, I think the L's just do not cut it, especially because as time goes on your allocation automatically becomes more and more conservative - regardless of how the market is going.
    "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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  15. #32

    Default Re: L2050 Fund

    the 2050 fund price is lower than the G...I can't get it thru my head that the share price doesn't matter...I could accumulate the most amount of shares by moving into the 2050...I know it's about % but isn't having more shares the ultimate goal to accumulating wealth

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  17. #33

    Join Date
    Feb 2007
    Location
    San Diego, CA
    Posts
    6,999

    Default Re: L2050 Fund

    The L Funds balance risk across the other funds. It is hard to get through your head I know, but each share is divisible by the "weight" of their investment. This is why they're "the lazy investor" alternative to "Buy and Hold"
    THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
    Tracker =
    Check my position

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  19. #34

    Default Re: L2050 Fund

    If you are looking at "shares", then you must consider the other factors that neccessarily are share related. Along with quantity, you must also consider value. More shares with less value (along with price) does not equal greater gain. In TSP, shares are an illussion, that is to say, just an expression of the dollar value of your account, and a helpful way of understanding the value relationship between the funds. If you understand that the primary funds were issued at $10 per share when they started using shares, you can see what the funds have done in relationship to each other. You could make this same comparison by looking at percentage growth between the funds during a particular time period. If they removed the "shares" expression tomorrow, it would make no difference. Notice, they do not give you the option to allocate by number of shares, only by "%". And remember, the L "funds" are not funds at all... they are merely composite expressions of the GFCSI funds. They have no dynamics of their own, apart from re-allocating ever more conservatively.


    Quote Originally Posted by rcknfrewld View Post
    the 2050 fund price is lower than the G...I can't get it thru my head that the share price doesn't matter...I could accumulate the most amount of shares by moving into the 2050...I know it's about % but isn't having more shares the ultimate goal to accumulating wealth
    Official Retirement Date: 06-31-2014!

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  21. #35

    Default Re: L2050 Fund

    so our share prices should only be viewed to see where they came from and where they might go...the prices give us a historical road map to navigate potential tops and bottoms...would a mimic allocation of the 2050 be better...it would be the same I guess except for the rebalancing...

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  23. #36

    Join Date
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    Default Re: L2050 Fund

    Quote Originally Posted by SkyPilot View Post
    If you are looking at "shares", then you must consider the other factors that neccessarily are share related. Along with quantity, you must also consider value. More shares with less value (along with price) does not equal greater gain. In TSP, shares are an illussion, that is to say, just an expression of the dollar value of your account, and a helpful way of understanding the value relationship between the funds. If you understand that the primary funds were issued at $10 per share when they started using shares, you can see what the funds have done in relationship to each other. You could make this same comparison by looking at percentage growth between the funds during a particular time period. If they removed the "shares" expression tomorrow, it would make no difference. Notice, they do not give you the option to allocate by number of shares, only by "%". And remember, the L "funds" are not funds at all... they are merely composite expressions of the GFCSI funds. They have no dynamics of their own, apart from re-allocating ever more conservatively.
    What SP said.

    When I first started with this thing in 97, there were three funds, G, C and F. You got a statement showing the percentages and value of these funds and the whole account. Sort of like "trust us, we're from the gubmint". At one point they created shares by dividing members holdings in each fund by 10. Anyone remember when that was? I noticed it during my long ago search of old statements but was looking for contributions and balance only so didn't document it. IIRC it was around 2003? Whenever, it did make grasping the whole thing easier for some of us.

    Along the "does anyone remember" line, when did they create S, I and the L funds?

    To me, using the nebulous "shares" method makes it easier to put in a spread sheet. If I owned 1000 shares of C on 11/20/08, the were worth $8,660. Today, 7/23/13, those same shares are worth $21,644. On the other hand on 3/10/09 those shares were worth $7368. Do the math however you like. Just look at the $ amounts. This market is not always going up.

    Most of the very valuable spreadsheet tools here on TSP talk that have any age on them use percentages. The reason is that back in the day there was no other way to track your daily balance. I believe that is why the autotracker works the way it does. Some respect and kudos to all the old heads on the board for figuring this out.

    About that L2050 Fund.

    In one place on the TSP.gov site it states the allocations for L funds will be adjusted quarterly. The info sheet at https://www.tsp.gov/PDF/formspubs/LFunds.pdf shows the Jan 13 spread as G4 F8 C43 S19 I26.

    It states:

    "The five L Funds were designed for the TSP by Mercer Investment Consulting,
    Inc. The asset allocations are based on Mercer’s assumptions regarding future
    investment returns, inflation, economic growth, and interest rates."

    No info on who on the FRTIB members own what or who MIC Inc donates what to.

    If you were to choose to you could split your own payday allocation to the above percentages and do an IFT to match them. Of course you would not be able to adjust it "daily" as stated in the info sheet.

    I have nothing against the L funds and have advised co-workers (once they figured out how to log in) to at least move some of their G to one of the L funds while exploring options. Now I advise them that the market has been going up for a long time and they are on there own.

    To all the newer members who weren't around in 08-09, you do not know the true meaning of market correction.

    PO


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