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Recommendations for TSP???


hundredwaters
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Does anyone have a recommendation for a relative inexperienced investor such as myself as to where to allocate money in a government defined contribution plan - is the Thrift Savings Plan?  I have the option of choosing large cap, small cap, bonds, treasuries, international stocks, a mix of my own design, or a mix that is determined by how long until I retire.  I have no ability to choose any particular stock.  I am currently in treasuries and missed some of the last run-up in the stock market.  I have read some articles about the unlikelihood of the overall stock market to have further growth, so I am at a loss what is the most prudent distribution is at this point.

 

Anyone have a TSP retirement here?

 

thanks!

 

HW

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Are you active, civilian with the match? Anyway, I Have had TSP for the better part of a decade and I leave it entirely in the C fund (S&P 500) and will leave there until retirement. I believe that is the best approach to TSP. If you want to invest in other ways, start a Roth IRA. The TSP is great due to the low cost and you can take Warren Buffett's advice and dollar cost average with an index, which the C fund is.

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We can't possibly know where the market's returns are going to be in the future, but we look to past returns and make an educated rational decision. For the average investor, that would be dollar cost averaging an index fund. If you are not near retirement, then bonds would not be the best choice. I personally believe that bonds have more downside in the near term than the stock market. What will happen to the value of bonds when rates eventually rise? 

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I have my sister's portfolio's TSP allocated to 60% S&P 500/Large Cap, 20% international and 20% small caps.  That mix has done well this year, given that international and small caps didn't do so well last year and rebounded this year.  There isn't much investment options when it comes to TSP, think there's like 5 funds to choose from and you have the life cycle funds. 

 

When she gets closer to retirement, it'll probably be allocated to 90% stocks and 10% bonds.  Right now it's 100% stocks.

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My sister is at the NRC, and I advised her to put 1/3 each into the C, S, and I funds.  Future allocations for the year go into the fund that lagged the previous year; alternatively, re-balance into the 1/3, 1/3, 1/3 proportions at the end of a year, whichever is easier.  Either method for investing future funds would take advantage of major drawdowns in the previous year in a particular fund.  Easier still would be one of the Lifecycle funds, but I agree with the others that one should be 100% in equities if younger than 50, and all the Lifecycle funds have some level of money market and bonds.

 

Also, max out on your contributions.  The TSP is one government plan that is superb.  If only a portion of each non-federal-employee citizen could opt to have a portion of his Social Security contributions with a TSP-like plan . . .

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Also, max out on your contributions.  The TSP is one government plan that is superb.  If only a portion of each non-federal-employee citizen could opt to have a portion of his Social Security contributions with a TSP-like plan . . .

 

My sister works for the feds and has a pretty sweet retirement, pension plus matching 401k.  They match 100% up to 5% of her gross income.  So she maxes her contributions.  They also offer a Roth 401k, but it's not match.  Her coworkers who are close to retirement are pretty happy with their nest egg.

 

I work for the state and they provide a pension.  The 401k doesn't have matching.

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I've only been a federal employee for a few years, but I will share my perspective on TSP. 

 

I put all of my new contributions into the G-Fund.  I think right now the G-Fund is earning a 2.5% annual return, so barely keeping up with inflation.  I view this like a pot of cash to invest as opportunities arise.   

 

As the market is moving up or side-ways, my biweekly contributions continue to build up the balance of money in the G-Fund.  When the market starts to fall, I use the mechanical process listed below.  The mechanical process keeps me sane. 

 

When we have a 5% pullback in the market, I put 50% of the money sitting in the G-Fund into the C-Fund (1/3), F-Fund (1/3) and the S-Fund (1/3).  If the market continues to a 10% drop, I put the remaining G-Fund money into the C-Fund(1/3), F-Fund (1/3) and S-Fund (1/3).  As the market rises or moves sideways, I do not remove money from the C-Fund, F-Fund, or S-Fund.

 

In February or March, I rebalance the C-Fund, F-Fund, and S-Fund so that each represent 1/3% of my TSP's non-G-Fund assets.   

 

 

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