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Author: volsfan0720 CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75379  
Subject: Military TSP Question Date: 1/3/2009 12:52 AM
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I am wondering if anyone would be willing to give me their opinion on a predicament that I am having. I am currently allocated 100% in the I-Fund that TSP offers with a balance of roughly $26,000. I was always willing to take a lot of risk, but recently I was wondering if I shouldn't start putting my future contributions into the G-Fund or F-Fund which would be way more conservative. I contribute $1300 a month into the plan and just wonder if it wouldn't be smart to keep buying the I-Fund because of it's ridiculously low price.

Thanks in advance to anyone who comments on this question.
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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65012 of 75379
Subject: Re: Military TSP Question Date: 1/3/2009 1:50 AM
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I was always willing to take a lot of risk, but recently I was wondering if I shouldn't start putting my future contributions into the G-Fund or F-Fund which would be way more conservative.

How old are you?

--Peter

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Author: JWR1945a One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65013 of 75379
Subject: Re: Military TSP Question Date: 1/3/2009 5:36 AM
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I was always willing to take a lot of risk, but recently I was wondering if I shouldn't start putting my future contributions into the G-Fund or F-Fund which would be way more conservative.

Yes, put it into the G-Fund for the next year or so until the markets settle down.

Cash is a great asset class for turbulent times.

Cash is not a good asset class over long periods of time (decades). Stepping aside for a year or two is fine.

Have fun.

John Walter Russell

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Author: volsfan0720 CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65014 of 75379
Subject: Re: Military TSP Question Date: 1/3/2009 7:35 AM
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Peter,

I am 30 with 11 years in the Air Force.

Regards,
BT

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Author: WPatch Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65018 of 75379
Subject: Re: Military TSP Question Date: 1/3/2009 3:09 PM
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I would question putting all of your equities into the I-fund, since it is over 99% foreign equities, which traditionally have been riskier than 100% C-fund(SP-500), nearly as risky as 100% S-fund(remainder of US stocks not in SP-500, mainly small-cap). We might have more years like 2008 in which, while the SP500 market had its third worst year, it outperformed the I market considerably. While the I-fund market was considered more value oriented than the US market one year ago, and it is even cheaper now, adding some US exposure would reduce your risk through diversification, and adding some of the S-fund would also increase your expected returns. (Since you are probably expecting a pension within 10 years, you may not want a fixed-income component to your retirement funds.)

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Author: yeilBagheera Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65025 of 75379
Subject: Re: Military TSP Question Date: 1/3/2009 8:05 PM
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You might change the current contributions to a different fund (while leaving the I fund as it is).

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Author: DrTarr Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65030 of 75379
Subject: Re: Military TSP Question Date: 1/3/2009 11:41 PM
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DIVERSIFICATION - !!

Volsfan - look, I am just a smuck on the internet with a keyboard and anonymity. However, I am a smuck who has a small portion in TSP, which just last week transferreed the whole TSP balance to the I-Fund. But before you interpret that as a sign you should stay 100% I-Fund, lets chat. Cause you may be missing three other things!

There are four asset classes that should be part of your overall portfolio.

1) Equities, e.g. Stocks in companies
2) Fixed Income, e.g. Debt in companies
3) Real Estate
4) Commodities

You are young and still in the income producing years, so, in theory, you have more risk tolerance. (In practice, I would say this is true as you have stuck it out in the I-fund.) So what should be a diverse plan for or aif force friend?

The first two of these categories are available to you in the TSP.

C, S, I funds are equity - so you should be in these. And diversification suggests you should be in all three.

F, G funds are debt - fixed income, these will track the treasuries and the Lehman bond index. - These I don't think you should be in. Two reasons. First as bond funds right now with no where but up for bonds rates to go, the NAV is going to drop.. While I don't have a crystal ball and this is just my opinion. It seems to makes sense. And Second, you have a retirement you are working on. That retirement has a present value which I consider in retirment portfolio allocation. And just off the cuff with your numbers, you have a sufficient allocation in fixed income. I think you came in when you could select the high 36.

The other asset classes you have to do outside of TSP. Which hopefully you can set up a tax deferred / tax free account to get some exposure here - but that is another topic.

So you should be in the C, S, I funds. How you are split up in these is a good question. I would not pull money out of the I-fund to put in the C-Fund right now, but I would consider doing so to get into the S fund. And I would then start contributing to the C, and S. And start building up the three funds to a fair allocation in each.

Open an outside account and get some other asset class exposure, keeping the fixed income at bay for now and as far as going to a cash position right now and sitting on the sidelines. I think that is a bad idea. That is market timing - that is not diversification.

d(TSP)/dT

Thank you for your service.

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Author: buzman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 65043 of 75379
Subject: Re: Military TSP Question Date: 1/5/2009 1:52 PM
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A 100% international stock portfolio will be very volatile (or a 100% any stock portfolio for that matter).

I would use one of the lifecycle funds the TSP offers.

buzman

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