Absolute beginner who put everything into G

[aznxk3vi17]

Thank you all for the warm welcome and superb input. I'm a bit preoccupied with work and stuff at the moment, but I can fill you in with further details about myself.

I'm currently 29 years old, and as such, I suppose the L2050 makes the most sense, as previously thought? Now about interfund transfers, how should I move my funds into the L balance? My friend advised not to do so all at once, and only when the S&P was at a low value.

 

[Boghie]

Also, I would advise moving all the 'G Fund' assets to either 2040 or 2050. 2040 if you want to watch the S&P500 for a little (say 10%) correction and then bump it into 2050. 2050 if you are in your 20s or 30s and would rather not mess with this stuff till you know what you are doing...

Assets in the 'G Fund' are dead assets. They are not working for you. There is really no reason to market time assets from a bank account to an investment account.

Finally, contributing 5% of your gross income will not cut it. You should be contributing at least 10%. Investment advisers normally recommend investing 15% of gross salary to retirement (that would be your 10% and the 5% match). Your 10% would actually feel like 7% or so because of the tax advantages.

 

[Boghie]

aznxk3vi17,

The 'L Funds' have a mix (an allocation) already in the G/F/C/S/and I funds. They are supposedly scientific allocations. It is smart to invest in the proper 'L Fund' till you get a bit of self-training or financial advice. But, to mix the 'L Fund' of choice with the individual funds is normally considered a mistake. So, in my humble opinion, your friend is making a mistake unless he can tell you what the mixed up allocation is and what it's expected return and risk are. If he cannot tell you that he/she is guessing. The allocation he/she recommended would probably be an 'L 2070' - very risky. Are you retiring in 2060 or 2070?

So, until you get familiar with allocations, pick a L Fund that matches your expected year for age 65. Go later for more return and more risk, go earlier for less return and less risk.

As far as assets in the 'G Fund' that is a tough question. We are probably at a toppy market short term so sitting in the G might make sense. But, who knows and who knows when the correction takes place. Do you have a crystal ball. And, if you picked 'L 2050' because your 65th birthday is around that year who cares. Had you been 100% invested in any and all of the 'risky' equity funds (C/S/I) in 2008 and watched it crash you are already positive again. Even more so if you kept contributing to the C/S/I funds.

In general, though, if you are in your 20s or 30s you should have NOTHING in the 'G Fund'. It really is a bank account with a little higher interest rate. If you keep your money there you will get about the same as your Social Security check. Same with your pension if you survive the next two decades or more (and you cannot get your pension till age 60 or so). So, do you want your retirement to be three Social Security checks. There are those around here that will tell you that Social Security and your pension will be 60% of your retirement. Do you want to count on politicians jiggering numbers in unfunded 'pensions' for your retirement. I did not know I had a pension at your age and thus plowed money into TSP and into C/S/I (when I got smarter). My TSP will probably fund 80% of my retirement and I will have more income at retirement than I have during my working lifetime. Yummy.

 

[nnuut]

Welcome to the Forum aznxk3vi17! There are plenty of different strategies on how to invest your money in the TSP. Read as much as you can, participate in the threads and ASK QUESTIONS. Hope to here from you more.
Best of luck
Norman

 

[RazorCat]

Look over the Premium Services offered here and pick one that you feel comfortable. Each system is explained in detail under Premium Services on the TSP Talk home page.
Some are a bit moe involved than others. But, all provide research and statistical data that would be diffcult to acquire on your own. Everyone is different and therefore has different tolerance levels for risk. I'm guessing you're a young man based on your description. Congratulations on your new marriage and an exciting future. You're on the right track it appears. Invest as much as possible in TSP early on and you'll never miss it as time goes by. Great tax breaks too. Most the members that have been successful will tell you diversification is the key to building your TSP account. Leaving it in G is a safe bet (except maybe for the fact Uncle Sam borrows from it periodically to pay the bills), but you're money won't keep up with inflation sitting in G all the time. If I were just starting out I would pick one of the L funds (L2030, L2040, L2050) based on my age and put my money there until I found one of the Premium Services I could live with. Just an opinion. It's a call you'll have to make. Cruise the Forums. There's some good philosophies on investing out there. Good luck.

 

[aznxk3vi17]

I was hired in 2007 fresh out of university, but with an engineering degree and absolutely no knowledge on finances or money management. Thus, I put 5% of my income all into G, because they said it was safe.

Fast forward to today and I'm a newly married man, and suddenly, the money matters so much more. Now, I still have the same knowledge of money, but I want to maximize my TSP.

I spoke with my friend, who is much better with money than me, and he gave me a crash course in the different funds, but I'm still a little in the dark as to how things work, and where/when I should be moving my money. From what I learned and gathered, the L fund is a good place to start as is echoed in these forums, and so he recommended my future allocations be placed 50% into the L 2050, 20% C, 15% I, and 15% S.

For interfund transfers, since 100% of my funds are in the G fund at the moment, and trickle funds slowly into L as stocks dip. What he wasn't very clear on was how much money I should eventually have in my funds. Should I move all my G funds eventually into the L? Should I leave money in the G? How much money should be in the other funds?

I'm very new at this, but I want to improve for the sake of my family and future family. Please help in any way you guys can!