Quality Assurance Specialist Tobyhanna Army Depot Wed Oct 6, 2004 8:17 AM
That might be a good formula based on the typical retirement age of 65. A lot of federal workers are able to retire at 55. Without investing for a longer period in common stocks, they may run out of money before they run out of life.
Re: Allocation
Quality Assurance Specialist DCMA Northern California Wed Oct 6, 2004 11:51 AM
True and a good point. However, I believe this to be an excellent starting point. As they said over and over again in the article it depends on each individual, the investments and their stage in life.
Re: Allocation
engineering technician VHA Tue Nov 9, 2004 10:43 AM
Q uite a few financial articles I have read over time state the same principle as TRP, some using 120-age. I am in a "Good" situation (ret mil&csrs) so I have two(2) defined benefit retirements, am 65, feel great, excellent health, so i "Go For It" with a salary allocation all stock of 50% C, 30%S, and 20%I with periodic rebalancing amongst ALL 5 funds.
0
How Should You Diversify Your TSP Portfolio?
Accountant Education Wed Oct 6, 2004 6:26 PM
I agree with the message of this article. That message, as I read it, is that the younger you are, the more you should invest in the stock market. But according to the formula, a 30 year-old should be 100% invested in the stock market is not good advise (110-age times 1.25). With the ups and downs, this invester will be very discouraged with the swings of the market.
Allocation
Contracts Specialist HHS Thu Oct 7, 2004 6:30 AM
I understand Fedsmith.com’s reluctance to provide investment advice because the organization is not an investment advisor (not to mention the legal exposure). On the other hand, as noted it is a news source to the federal community. Because this and related investment questions arise so often, and because your organization is tapped for advice, seems to me that printing excerpts from an investment news letter misses the point. Evidently, you and/or your organization are queried because there is a perceived belief that as part of the federal community, you must have some special investment insights or strategies specific to federal employee investors that are not available from the T. Rowe Prices of the world. While I don’t subscribe to my own theory, these repeated questions perplex me. If your column was a chat room on a web forum, the administrators would have put up a “FAQ” site and somewhere on the home page an admonishment to “use the search function” before asking a question. Just my .02.
Can someone help me understand a basic TSP concept? Probably a very simple concept, but I would like to take this opportunity to ask the question.
As I observe the changes in my different fund balances based on the gains or losses in a particular fund on a particular day, I have observed that if there is a loss in, for example, the S fund on a particular day my balance is instantly adjusted downward, so that amount of dollars are lost for all time. I can't help but compare that to the situation of purchasing aparticular stock, for example, where (as I understand it) I would not realize a gain or a loss until I actually sold the stock or until a dividend was announced & distributed. The paper value of my portfolio might be adjusted based on the share value on a particular day, but it could live through some bad times with the thought that at some future time the stock's value may increase.
Is the difference between the two based on the fact that the TSP is basically a mutual fund with a variety of investments as opposed to the action of a single stock?
I really dislike having to take a loss based on each single day's activity, and then watch that part of my fund permanently vaporize. As a result of this phenomenon I have an extremely conservative distribution in TSP that is unlikely to change based on my current level of knowledge.
Appreciate hearing other views!
Re: TSP Distribution
Operations Resarch Analyst US Army Thu Dec 30, 2004 12:55 PM
There is no difference. The value of your shares of stock goes up and down with the market. The value of your TSP investment in an index fund goes up and down with the market. The number of shares you own is unchanged until (a) you buy more shares (e.g., monthly investment), or (b) you sell shares (e.g., an interfund transfer or withdraw money from your TSP). In an index stock fund, dividends are reinvested on your behalf automatically. If you look at your TSP Quarterly Participant Statement you will see the change in the number of shares you own for each fund in the Transaction Detail by Fund along with the date and reason.
Re: TSP Distribution
Analyst DOC Tue Jan 11, 2005 2:54 PM
You are correct VA; this has puzzled me for a long time. Think of it like this. Let's say that your TSP accounts lose so much value that the dollar amount goes to zero, regardless of subsequent future increases, there is now nothing to increase, the dollars are gone. In a stock purchase environment, the stocks may deplete to zero value, however, the empty shell is always there to refill as values come back. Your actual number of items that can increase and decrease in value remains intact - not so when you lose actual dollars. Dollar-cost averaging is supposed to work with the TSP - does it? This whole issue is confusing and troublesome, that's why the system changed several years ago in an attempt to instill a much-needed correction and supply confidence to us users.
Re: TSP Distribution
Principal Inspector FAA Tue May 23, 2006 9:41 AM
You have made some erroneous assumptions which are causing you unnecessary consternation. When the value of your TSP drops you have not lost those dollars for all time. If you look at your account balance page on the TSP web site you will see two columns, shares and share prices. The value is the number of shares multiplied by the share price. When the balance drops it is because the share price has dropped, but the number of shares stays the same. When the share price goes up the balance goes up even if the number of shares remains constant. If you look at this logically it is the same situation as with individual stocks. You only loose if you withdraw the money when the share price is down. This equates to selling the stock when the price is down. Don't pay so much attention to the day to day balance, but just rebalance your TSP once or twice a year to maintain the balance with which you are comfortable.
Advice from T.Rowe Price
Supervisor Army RRC Wed Dec 15, 2004 9:34 AM
I thank you for the info and I think this will help myself and others. I was to retire next year but I will try to stay about five more yrs. Now I can work with my TSP a little more.
Redistributing TSP Funds
Supervisor DAPS Fri Dec 31, 2004 10:25 AM
I enjoyed the comments about not putting all your eggs in one basket. I was about to make that decision. I will now reconsider my thoughts on this matter.
I would ask this question. With the power to redistribute funds at any given time it would seem to make sense taking chances is less dangerous.. I am now starting to watch daily what is happening with my investments. If I notice C,S or I is doing poorly, I can go in and move funds from one to another or to G or F. So, while S and I are doing well, why not invest heavier and when it becomes obvious I need to redistribute, then I will redistribute. Several years ago I moved all my funds from G to C. I have not regretted doing it. Recently, I moved some funds from C to S and I. I have just moved 50% to C and 25% to S and 25% to I.
Re: Redistributing TSP Funds
Principal Inspector FAA Tue May 23, 2006 9:46 AM
Be very careful with this. It is very close to chasing returns which is a loosing straegy.
Allocation
Contracting Officer AMCOM Mon Jan 3, 2005 3:28 PM
I am currently at retirement age, but I too want to make my TSP work for me. I am contributing the max for CSRS (10%) and the over 50 Catch Up contribution of $4000 this year. This is a stretch for my budget, but it does help me on taxes. I have the following allocation 10% G, 30%, C, S and I. Since I have 37 years and this is not my only retirement under CSRS, I am being a little more agressive.
Diversify TSP Portfolio
Civil Eng. Tech Corps OF Engineers Wed Feb 23, 2005 4:23 PM
I was just speaking with my Financial Advisor about redistribution of my funds, and here are his thoughts for my personal situation:
The Feds have taken the economy about as far as it can go by artificially stimulating it through lowering the Prime Interest Rate and other efforts. Therefore he thinks that the C,S, and I funds are going to go through an adjustment downward between now and summer.
He recommends about 50% between the G and F funds, with the remainder spread out between the C, S, and I. He recommended 15% each in the C and S fund and 20% in the I fund.
He feels that the overseas economy is not as dependent now as it has been in the past on the U.S. economy.
I am 50 with 27 years and plan on retiring at 55. He recommends caution at least through the end of the summer.
I consult with him about every month. In looking at the way the funds have been up and down the last month, the trend is down.
Also, the S&P site on the internet predicts that stocks are going to drop in the S&P500 (C fund is supposed to approximate), and the Wilshire 4500 Index (S fund is supposed to approximate) over the next few months.
As they say; Check it out and decide for yourself!!
Redistribution od TSP allocations with age
Software Engineer NAVAIR Wed Feb 28, 2007 2:14 PM
I'm getting on in my career and accumulating a reasonable amount of money in in my TSP account. This is when my investments I've been making all these years have the potential to really pay off. However I'm being told that I should be reducing my earnings (moving to lower volatility and return investments). If I've been expecting the G fund to grow (over a period of months/years) in the past, why shouldn't I in expect it to grow (on average) in the future? As a FERS employee the TSP isn't my only basket of eggs , anyway (social security, FERS annuity). I believe I'll just tough it out and leave 85-90% of my investments in the C, S and I funds. Maybe I'll have to work an extra year than I'm hoping, if the markets tank, but more likely I'll be ahead.
Bond Fund
Scientist EPA Tue Dec 9, 2008 12:13 PM
In this article, the reference to the TSP Bond Fund gives a false impression that the F fund is stable and similar to the G fund. Bond funds in general and including the TSP F Fund have sizable inherent risk because the share price increase or decrease is tied to the movement of interest rates, whether they are rising or falling. The TSP bond fund can be really risky indeed. Want to loose money, put your money in the F fund and then leave it alone. When you return to take a look, you may see that you've lost a substantial portion of your net worth.
TSP Design and Website
Mechanical Engineer PSNS-IMF Bremerton Tue May 12, 2009 8:35 AM
I'm over 63 and have been in and out throughout this large depressed market. I found myself making much more money than the "buy and hold" philosophy. TSP puts a bind my any impulsive behavior which I like but TSP lacks any ability to show any user the progress of his or her investment. Someone tell these guys to redesign their website and make it more user friendly. I could use a good graph comparing my own management against each individual TSP fund. I think individuals would more appreciate the TSP if they could interact more than looking at the account balance at the end of the day. Who thought up these pie charts? Do they assume all federal workers are idiots with their money? How do you reach these guys to make "change" happen?
new to the game
leader rrad Mon Jun 8, 2009 11:58 AM
i am new to the game but very interested in it. i have recently put 75% into the i fund is this smart desicion and how does the value of our dollar to say the eruo have to do with making money. is it better for our dollar to be worth .70 cents in euro's or to be say 1.25 in euro's.
Allocation
Tobyhanna Army Depot
Wed Oct 6, 2004 8:17 AM
That might be a good formula based on the typical retirement age of 65. A lot of federal workers are able to retire at 55. Without investing for a longer period in common stocks, they may run out of money before they run out of life.
Re: Allocation
DCMA Northern California
Wed Oct 6, 2004 11:51 AM
Re: Allocation
VHA
Tue Nov 9, 2004 10:43 AM
0
How Should You Diversify Your TSP Portfolio?
Education
Wed Oct 6, 2004 6:26 PM
I agree with the message of this article. That message, as I read it, is that the younger you are, the more you should invest in the stock market. But according to the formula, a 30 year-old should be 100% invested in the stock market is not good advise (110-age times 1.25). With the ups and downs, this invester will be very discouraged with the swings of the market.
Allocation
HHS
Thu Oct 7, 2004 6:30 AM
I understand Fedsmith.com’s reluctance to provide investment advice because the organization is not an investment advisor (not to mention the legal exposure). On the other hand, as noted it is a news source to the federal community. Because this and related investment questions arise so often, and because your organization is tapped for advice, seems to me that printing excerpts from an investment news letter misses the point. Evidently, you and/or your organization are queried because there is a perceived belief that as part of the federal community, you must have some special investment insights or strategies specific to federal employee investors that are not available from the T. Rowe Prices of the world. While I don’t subscribe to my own theory, these repeated questions perplex me. If your column was a chat room on a web forum, the administrators would have put up a “FAQ” site and somewhere on the home page an admonishment to “use the search function” before asking a question. Just my .02.
Re: Allocation
FedSmith.com
Thu Oct 7, 2004 6:50 AM
TSP Distribution
VA
Mon Nov 29, 2004 11:44 AM
Can someone help me understand a basic TSP concept? Probably a very simple concept, but I would like to take this opportunity to ask the question.
As I observe the changes in my different fund balances based on the gains or losses in a particular fund on a particular day, I have observed that if there is a loss in, for example, the S fund on a particular day my balance is instantly adjusted downward, so that amount of dollars are lost for all time. I can't help but compare that to the situation of purchasing aparticular stock, for example, where (as I understand it) I would not realize a gain or a loss until I actually sold the stock or until a dividend was announced & distributed. The paper value of my portfolio might be adjusted based on the share value on a particular day, but it could live through some bad times with the thought that at some future time the stock's value may increase.
Is the difference between the two based on the fact that the TSP is basically a mutual fund with a variety of investments as opposed to the action of a single stock?
I really dislike having to take a loss based on each single day's activity, and then watch that part of my fund permanently vaporize. As a result of this phenomenon I have an extremely conservative distribution in TSP that is unlikely to change based on my current level of knowledge.
Appreciate hearing other views!
Re: TSP Distribution
US Army
Thu Dec 30, 2004 12:55 PM
Re: TSP Distribution
DOC
Tue Jan 11, 2005 2:54 PM
Re: TSP Distribution
FAA
Tue May 23, 2006 9:41 AM
Advice from T.Rowe Price
Army RRC
Wed Dec 15, 2004 9:34 AM
I thank you for the info and I think this will help myself and others. I was to retire next year but I will try to stay about five more yrs. Now I can work with my TSP a little more.
Redistributing TSP Funds
DAPS
Fri Dec 31, 2004 10:25 AM
I enjoyed the comments about not putting all your eggs in one basket. I was about to make that decision. I will now reconsider my thoughts on this matter.
I would ask this question. With the power to redistribute funds at any given time it would seem to make sense taking chances is less dangerous.. I am now starting to watch daily what is happening with my investments. If I notice C,S or I is doing poorly, I can go in and move funds from one to another or to G or F. So, while S and I are doing well, why not invest heavier and when it becomes obvious I need to redistribute, then I will redistribute. Several years ago I moved all my funds from G to C. I have not regretted doing it. Recently, I moved some funds from C to S and I. I have just moved 50% to C and 25% to S and 25% to I.
Re: Redistributing TSP Funds
FAA
Tue May 23, 2006 9:46 AM
Allocation
AMCOM
Mon Jan 3, 2005 3:28 PM
I am currently at retirement age, but I too want to make my TSP work for me. I am contributing the max for CSRS (10%) and the over 50 Catch Up contribution of $4000 this year. This is a stretch for my budget, but it does help me on taxes. I have the following allocation 10% G, 30%, C, S and I. Since I have 37 years and this is not my only retirement under CSRS, I am being a little more agressive.
Diversify TSP Portfolio
Corps OF Engineers
Wed Feb 23, 2005 4:23 PM
I was just speaking with my Financial Advisor about redistribution of my funds, and here are his thoughts for my personal situation:
The Feds have taken the economy about as far as it can go by artificially stimulating it through lowering the Prime Interest Rate and other efforts. Therefore he thinks that the C,S, and I funds are going to go through an adjustment downward between now and summer.
He recommends about 50% between the G and F funds, with the remainder spread out between the C, S, and I. He recommended 15% each in the C and S fund and 20% in the I fund.
He feels that the overseas economy is not as dependent now as it has been in the past on the U.S. economy.
I am 50 with 27 years and plan on retiring at 55. He recommends caution at least through the end of the summer.
I consult with him about every month. In looking at the way the funds have been up and down the last month, the trend is down.
Also, the S&P site on the internet predicts that stocks are going to drop in the S&P500 (C fund is supposed to approximate), and the Wilshire 4500 Index (S fund is supposed to approximate) over the next few months.
Their sites are as follows: www.wilshire.com/indexes/broad/wilshire4500/
AND: tvector.com/stock-market/standard-poors500.htm
As they say; Check it out and decide for yourself!!
Redistribution od TSP allocations with age
NAVAIR
Wed Feb 28, 2007 2:14 PM
I'm getting on in my career and accumulating a reasonable amount of money in in my TSP account. This is when my investments I've been making all these years have the potential to really pay off. However I'm being told that I should be reducing my earnings (moving to lower volatility and return investments). If I've been expecting the G fund to grow (over a period of months/years) in the past, why shouldn't I in expect it to grow (on average) in the future? As a FERS employee the TSP isn't my only basket of eggs , anyway (social security, FERS annuity). I believe I'll just tough it out and leave 85-90% of my investments in the C, S and I funds. Maybe I'll have to work an extra year than I'm hoping, if the markets tank, but more likely I'll be ahead.
Bond Fund
EPA
Tue Dec 9, 2008 12:13 PM
In this article, the reference to the TSP Bond Fund gives a false impression that the F fund is stable and similar to the G fund. Bond funds in general and including the TSP F Fund have sizable inherent risk because the share price increase or decrease is tied to the movement of interest rates, whether they are rising or falling. The TSP bond fund can be really risky indeed. Want to loose money, put your money in the F fund and then leave it alone. When you return to take a look, you may see that you've lost a substantial portion of your net worth.
TSP Design and Website
PSNS-IMF Bremerton
Tue May 12, 2009 8:35 AM
I'm over 63 and have been in and out throughout this large depressed market. I found myself making much more money than the "buy and hold" philosophy. TSP puts a bind my any impulsive behavior which I like but TSP lacks any ability to show any user the progress of his or her investment. Someone tell these guys to redesign their website and make it more user friendly. I could use a good graph comparing my own management against each individual TSP fund. I think individuals would more appreciate the TSP if they could interact more than looking at the account balance at the end of the day. Who thought up these pie charts? Do they assume all federal workers are idiots with their money? How do you reach these guys to make "change" happen?
new to the game
rrad
Mon Jun 8, 2009 11:58 AM
i am new to the game but very interested in it. i have recently put 75% into the i fund is this smart desicion and how does the value of our dollar to say the eruo have to do with making money. is it better for our dollar to be worth .70 cents in euro's or to be say 1.25 in euro's.