Others including me, do the same 50-50 split between C&S, but that doesnt mean it is the right thing for you, especially with your withdrawal horizon much closer than mine. It depends on what type of account you have. Inflation? S Fund will continue to greatly outpace C Fund? M.. .y TSP retirement funds have been sitting in the G fund. 32 years of service at age 56 and 2 months) and start taking TSP withdrawals/monthly payments without and additional tax penalties. He hosts a podcast and YouTube channel all about federal benefits and retirement. Rich, if I plan to stay with my agency for another 4-5 years but have reached a $1mil mark with my S/C Funds, would it be prudent to move the bulk to G to save the gains while continuing to deposit my paycheck allotments to S/C funds for the remaining years? It is my understanding that we are not taxed after 59.5? I have never made such a bad (costly) move. No, there isnt. -Tax Strategy: Taking advantage of opportunities in the tax law. Great read and thank you for your time and dedication to this work. Its already a mix of all funds made by supposed experts. My current balance is just over $820K. That's 90% equity and 10% bonds. I use the L-cycle funds for the multiplier they are cheap shares that I have been able to more than double 3 times over the past 10 years. I cant tell the future, though. If you are already long retired, you probably shouldnt invest as aggressivelyas you are suggesting. This became even more true when I started to consider that investing for growth (with care) doesnt have to end the day I retire. Share your TSP allocation and reasoning in the comment section below. Also, next time there is a drop in the market, hell think hes good at predicting these, and sell again. And this is where I lose most people Its because I have more than quadrupled my shares while maintaining that 10.79% return I would not have a third of the shares today had I stuck with just the S&P. I took 10 percent and put it in each L. I left it like this for little over a year. What Makes Us Unique? 10% in the S Fund. That future option may be the only reason I leave some money in TSP. He has 3 separate TSP allocation recommendations based on your risk tolerance: conservative, moderate or aggressive. Is it necessary to set these two at the same percentages when making changes or what would be the reasons for changing one and not the other? The Perfect TSP Allocation | Plan Your Federal Benefits . Thanks for the info. Warren Buffett has been quoted many times recommending the S&P 500 index fund as an investment strategy over picking individual stocks. There is enough international exposure between C and S IMHO. Rich, great information. Hello Rich, I came across your article this evening and really enjoyed all of the information. Can you survive a huge drop in the market? Any suggestions? TSP I think the lifestyle are meant to be a balance of riskier (C, S) vs fixed income (G,F) that is appropriate for your risk tolerance. You just have to decide what your risk tolerance is and invest. The 10% in bonds is something he decided for his own heirs. I have had my monthly contributions split 80/20 C&S for some time now. Im 10 years in Active service and plan to continue my 20% monthly contributions for the next ten, however that still has me FAR from maxing out yearly. So you need 10% bonds, which means 10% F fund. I am BRAND NEW in this TSP game and currently at 100% L 2050 with a whopping $5k total invested. Looking at the 2021 composition of my L funds I would like to make changes and do the following. MSPB Is it with doing that. Ive pulled these from various sources and as I discover new ones, I will update this. For that reason, I invest the same amount no matter whats happening around me. The common wisdom is not to sell in a panic. Hi Rich, Thanks so much for all your financial help and guidance! With such a drastic drop and still more potential to go down would you still consider this to be true? I think its a good move, but nobody knows what the market will do in the next 5 to 8 years. I did see your separate email and thought I responded, thank you. If you want a full guide on how to tailor your TSP to your needs, check out this article. 30% in bonds. What it Takes to Be a TSP Millionaire in Today's Dollars. Thats what I gave you in this article. You have more control over the funds, and there are more investment options. When you say the S is up 102%, thats a little exaggerated, because really a lot of that is just the recovery from a quick drop. I also didnt spend any of the money, as it was direct deposited and then directly transferred into said savings account. Should I start now or wait for the market to rebalance? Rich, Great website! What matters is historically what the C and S fund have paid, and what they might pay in the future. Yep, that appears to be correct. I just know over the long term, it will eventually go up. 30% each in the G, C, and S fund and 10% in the I fund. How to Invest in the TSP 2023 - 9 Strategies - Rich on Money You are spread out in all the equity buckets. TSP Coach | TSP Fund Allocation Strategies While I mentioned earlier I got my idea for an all S&P 500 index allocation from something Warren Buffett said in a newsletter, he actually has more specific instructions I want to address here. And have gone on to buy an additional 36 other company stocks through STASH. tsp allocation recommendations 2016. I currently invest in F,C, S and I funds. watch for it. Youll have to do your best to decide that. Not really sure what to do at this point. 75%- C 20% - S 5%- I. I make $41,500 as a base ( not including OT) I contribute 12% right now. I told those TSP police to trust me on this. The converse, however, is also true. Ill send you a separate email. You can use the form TSP-60 or TSP-60-R to do this. My Current TSP Allocation for 2023 Best TSP Strategy for 2023 One Change to Make in 2023 TSP INVESTING GUIDE - THE FUNDS The G fund contains short term U.S. Treasury securities with no exposure to the risk of the bond or stock market The F fund is an index of world-wide government, corporate, and mortgage-backed bonds The C fund is equivalent . Presidents Day: Why It is Celebrated, Expanded, and Impact on Federal Employees, You Can Still Contribute to an IRA for 2022, Top 5 TSP Mistakes Federal Employees Should Avoid. I picked my top 3 Ls then invested most in them 3 splitting them up equal. It sounds like youre doing well. Thanks and best wishes, One may outperform the other by 1 or 2 percent, but in the end, who knows which. It might be really high, because we are in for a bigger drop. If you want to take a risk and try something different you can try my method for a few months to a year and the recheck to see where you want you highest percentage going. I have been 50/50 C/S since dumping I ~5 years ago. This fund has mid and small-cap stocks, making up the rest of the stocks in the market other than what is in the S&P 500 index. Vaccinations The S Fund has been way up, and I feel Im missing the boat. No way of knowing until the future comes. The TSP has no loads, fees, and very low expense ratios. Current Recommendations | Model Investing This limits your downside. I just updated it. Hes an accomplished author, speaker, and is well known for the ultimate buy-and-hold portfolio. Very informative article. Allocation Based on Age You can allocate your retirement plan using your age. Keep 10% in G funds, 10% F funds but increase C fund to 65% and S to 15%. When speaking about TSP, some people just look at the total value of the funds I have spoken to many people who only do C & S and brag about how well their $60.00+ shares are doing However they are in disbelief that my accounts regularly out perform their own when looking through a 5-10 year performance window. If you have been retired for awhile, then you will likely have access to this money soon, once you turn 59 1/2. One comment: your TSP guide indicates that you will suffer additional tax penalties if you start taking TSP withdrawals under age 59 & 1/2 . Employee Relations Only two things are required: Time and a good investment strategy. More options for investing and withdrawal. I flipped houses and purchased rental property with cash while living overseas in the military. I am a FERS-Law Enforcement retiree, age 54. Hello Rich, Thanks! Some competitors keep changing their strategies, others not listed do not even provide their returns, and finally, some trade more than two times a month. It was kicking butt and now obviously its not! . Dave Ramsey's TSP Advice: The Good, Bad, and Ugly - Haws Federal Advisors Ive been invested in the L 2040, but have felt for a while that its too conservative. You can use that as a basis to decide if that's the right amount of risk you want. Model Investing recommendations are protected by copyright law and intended for the use of one individual or family per subscription. G Fund (2.50%), F Fund (11.92%), C Fund (52.75%), S Fund (19.25%), and I Fund (13.58%). A traditional IRA and both a Roth and Traditional 401K can, but not a Roth IRA. Quarterly reallocating the investment gradually from roughly 28% to 80% invested in treasuries and bonds. I invested early into TSP at a buddys advice, however I have had my entire allocation in the G Fund for the last 15 years. I think 10% is a small risk that I feel comfortable to invest. Using any one of these recommendations over the long term is essentially how to invest in the TSP for 2023 or any other future year if you: Changing strategies or funds often is a recipe for low returns. FEHB Taxes Thanks. I started very late in the game back in 2008 making small contributions (what every I could afford) and have been very aggressively contributing since 2013. Attached is a graphic from his website outlining exactly how to do this strategy. David, I bet you are very pleased with your decision. I wish TSP invested in Chinese markets and other international areas, if they did I would be inclined more in the I fund. I totally understand that if I bought more C and S now, it could continue to go down during this pandemic, and that wouldnt bother me. It includes the same tax benefits as a 401 (k), and many agencies offer matching contributions. I transferred from one agency to anotherfor the past 6 years I was not able to contribute into my TSP because of a mix up from my old agency. The mutual fund industry average is around 1%, or $100 per $10,000 invested. Thanks. Do what you think is right for your risk tolerance based on age and life circumstance. Its really helpful to think about TSP the way you have broken down. Either way, is 100%S fund a bad idea at this point of my career? I am very curious as to how much dividends make up each of the C,S, and I fund returns. Anyone can use a certain percentage of bonds if they would like bring down the volatility of their investment. It is currently Feb 2021 and I plan to retire in December of 2021. I have 3 years to retirement and not ready to stay in G justy yet. Can you stomach that happening again in a few months or a few years? Your mistake wasnt really too bad. I am thinking of changing my allocation to 30G 30F 30C 10S. I still have about $70k in student-loan debt Im tackling, but am optimistic and determined to build generational wealth. The only thing I will say is, try to contribute more money! The rest is divided up between the C, S, and I funds, which are invested in the stock market and more volatile. Youve decided that you want to try to time the market, and you moved everything from a lifecycle fund to bonds and treasuries. Dont try to guess when it will go up and go down. Thanks for the straight-forward and fact-based article on TSP funds. What are your thoughts. The Rich on Money world-wide dominance TSP portfolio: I know, I know. Holidays I plan on retiring when Im 56 with 36 years of service. Through using these types of investment strategies (Ill tell you exactly which one I used), I became a military millionaire well before retirement. its all about risk tolerance. At the end of the day, the differences between the two will not be large. I would like to know if this is a good mix for me at this stage of my life or do you have a better investment mix while I have another 2 years to work and also what would you recommend what percentages to invest in the funds AFTER I retire at the end of 2021? Best. I am a 34 year FERS employee that retired at MRA 56 last year. I think you quickly disagreed before first understanding that the multiplying of shares through buying Lcycle funds at their inception price < that is the absolute key for my accounts overall performance and for the very large spikes in increased growth/value in short periods of time. @Lily, I fully respect this article and Richs reply comments including yours, glad you found the site. Best TSP allocation for retirees Why your best TSP allocation may be "none of the above" Im not a big political guy but my gut says the current administration has a lot to do with that. Income risk: the funds income may decline because of falling interest rates. This is where I get my weird percentages from. Also at what percent? Great read. The moderate portfolio: 12% G and 28% F, and the rest in S, C and I at 50/25/25. Focus on active risk management and capital preservation. Im just a little too hands-on for that, though. I am not a big risk taker, but do want to see my money grow. I like to freedom to allocate for myself. NEXT UPDATE: August 1st, 2023. I also will be able to retire soon, in about 3-4 years. I reveal secrets here that nobody else knows. The closer you are to needing to withdrawal the money, the more you pay consider a percentage of bonds as a protection. Richdo not think 8/1 is on the best dates to retire listthink 7/31 is however. It was straightforward in turbotax. 1% gain is still always equal to 1% no matter how you slice it. How to Invest in the TSP 2023 - 9 Strategies - Investguiding I went 60% C and 40% S. Thanks for the insights. For example, if on average you earn 10%/year then your money will take 7.2 years to double (72/10= 7.2). Id like to encourage others to share what they are doing so people can compare and make their own informed decisions or tweaks. Some people will put a certain percentage of their funds in G and F (treasuries and bonds) because these are much less risky. I dont see why it would not be a good move. Great article! I am a 54 yr. old Federal law enforcement agent with 32 yrs. Guess Im the only one who is thinking this granularly. The F fund tends to be superior when interest rates are flat or falling. If I reach the $19,000 to soon, I will lose the government matching 5% for the remaining pay periods. I am thinking I should now go perhaps 50/50 C and F fund. It will be a total of $20,500 ($20,500/26 = $788 per pay period). Rich, thanks sharing these investment strategies. TSPDataCenter.com: Latest TSP Performance & Share Price History And thanks for your time. No one else knows either, but some will pretend they do. You are super new and your investment horizon is 20 or 30 years. That would have really screwed you! Medicare It is wise to put a specific percentage of fixed income, which is bonds or treasurie bills into your portfolio of stocks to lower market risk as you near retirement. He does make specific recommendations for TSP owners using what is available to us. This portfolio is meant to mimic the Vanguard Balanced Index Fund Admiral Shares (VBIAX). -Investment Planning: Building wealth for your future. I am subject to a mandatory retirement in 35 months at age 57. I think at 61 and working another 7 yrs, I also increase C to 50%, S to 12% and I to 14%. Additionally, instead of investing his wifes inheritance in Berkshire Hathaway stock, he plans to invest it in the S&P 500 index. Then I might have enough time to do some more writing and videos! But one caveat is something I learned from Lyn Aldens post on I fund which I didnt look carefully at. You will have potential for more growth, but that comes with the possibility of higher losses in a down market. What you can change in your TSP portfolio year to year is your exposure to risk. Financial Independence Retire Early (FIRE) enthusiasts will swear to the superiority of this index to the S&P 500, and to suggest considering anything else is heresy! This section is designed to open your eyes to some factors that should inform allocation decisions. When strategies call for an international index fund, they probably mean one with exposure to emerging countries and smaller companies as well as the ones listed in the MSCI EAFE. Based on this I am assuming I can retire from service with minimum age & years requirement met (i.e. The costs can vary widely as well as their returns and together can give you a better SWAG (or more informed decision if you prefer). Thats a tough call. I was just thinking that with me being 2yrs away from retirement I should try to protect what I have from big hits. If so which funds and percent? When i finally did look into it was roughly 3k in the account (could have been more if i knew more at the time). I think thats a bad idea. 90% C fund and 10% F fund. The lifecycle fund adjusts quarterly slowly towards a more conservative portfolio. I recently made a change in my TSP allocations as you had considered me to do and moved all of the amounts that I had in the C,S and I fund into the G fund in case the market takes a nose dive before I retire in 2021. Do you think this is a good move early in the game? What do you think about this fund allocation? The question is when to move money from G back into the L funds since we are at record highs. Personally, Id go Roth, but who knows. My question to you is would you get back into the S Fund now at its peak or wait until the S Fund goes down? I like the way I do it. great post! Fair enough. We have our own trading day seasonal almanac that tells us what calendar influences are driving the markets. Put money in the asset allocation that makes the most sense to you, and then stick with it through thick and thin. Most recoveries dont happen that quick. There isnt a hell of a lot of difference in contributing to C or S, just pick what you think will work long term and stick with it. If thats conservative enough for you, then a lifecycle will work, but only if you dont sell in a panic. Many people invest in 100% stocks. Should I transfer my orphan retirement fund from my old employer into TSP? 1. Sign up for our Free Newsletter to access the best investment information money can't buy. I just starting using Yahoo finance to track all of my investments, including those outside of the TSP and I cant find any funds with the same prices, which would allow me to track everything together.
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