Agressive Investing

[WallStreet]

I am young and plan on leaving my money in the TSP for many more years (25+). Right now I am allocated 4% (G), 7% (F), 65% (C), 16% (S), 8% (I). I have about three questions:

1) Which fund I sould "try" to grow the most shares in and why?

2) Based on my current allocation should I spread more of C into S & I funds?

3) Is having such a small percentage in G and F even effective (effective = help minimize losses)? or should I put more into G and F, or go the other way and take it all out of G & F?

Thanks for any advise.

Here's to the possibility that one day I'll understand all of this investing stuff! -->

 

[WallStreet]

Also FYI I tried to base my current allocation off of the L2040, but I modified mine to try and make it a little more agressive...

 

[JTH]

I am young and plan on leaving my money in the TSP for many more years (25+). Right now I am allocated 4% (G), 7% (F), 65% (C), 16% (S), 8% (I). I have about three questions:

1) Which fund I sould "try" to grow the most shares in and why?

2) Based on my current allocation should I spread more of C into S & I funds?

3) Is having such a small percentage in G and F even effective (effective = help minimize losses)? or should I put more into G and F, or go the other way and take it all out of G & F?

Thanks for any advise.

Here's to the possibility that one day I'll understand all of this investing stuff! -->

1) That's not a simple question, but here's a simple answer. The S-Fund because it will outperform the C-Fund and is more stable than the I-Fund.

2) Yes

3) Having a little tucked away in the G&F funds can be more effective if you were to use a proper DCA strategy. For example when a real market crash occurs, you could run into stocks, this would help soften the blow you took. But beware you might not get the dead cat bounce you were hoping for.

 

[EmoDx]

I am young and plan on leaving my money in the TSP for many more years (25+). Right now I am allocated 4% (G), 7% (F), 65% (C), 16% (S), 8% (I). I have about three questions:

1) Which fund I sould "try" to grow the most shares in and why?

2) Based on my current allocation should I spread more of C into S & I funds?

3) Is having such a small percentage in G and F even effective (effective = help minimize losses)? or should I put more into G and F, or go the other way and take it all out of G & F?

Thanks for any advise.

Here's to the possibility that one day I'll understand all of this investing stuff! -->

1. Look at current market, recent performance, and near term market outlook. This means look at the top 50 allocation, see if it makes sense, and ask in the boards if it makes sense.

2. See answer 1.

3. G is effective in minimizing losses. F is not. F does remove some volatility. But all that meant in the last 6 months was a steady downward trend.

I am not an expert at the TSP, so your mileage may vary. One thing that you may want to consider in re-balancing your asset allocation. This is sometimes referred to a scraping, culling, evening, etc.

Every so often, depending on your style, you re-allocate your allocation. For example, your target allocation is:

G: 4
F: 7
C: 65
S: 16
I: 8

Income:
20:
30:
40:

After a good run in equities you current allocation may look like:

G: 2
F: 3
C: 66
S: 18
I: 11

Income:
20:
30:
40:

At this point you go back in to TSP an make an allocation change to your original values. You'll have to ask, but I think you can make unlimited transfers that do not actually change your original allocation.

What this does is the same as dollar cost averaging. But I only advocate this in a market environment that is heading upwards. Why reallocate when it is heading downwards as that locks in losses?

In order to do this, don't worry about daily movements in the fund prices. You'll want to look at the intermediate trend value of your account. If the account is heading down, don't reallocate. If it is heading up, reallocate. By reallocating you lock in profits. By not reallocating, you let it ride until profitable.

Good luck!

- Emo

 

[lionround]

As an aside, since the L funds rebalance every day to maintain their percentages, it is the equivalent of Dollar Cost Averaging without having to make any IFTs. I have been testing that by tracking my L2050 performance daily. Please note:

Share Price Shares Value
02/09/11
10.28 963.6 9901.45
02/11/11
10.23 963.6 9862.13
02/14/11
10.28 963.6 9905.30

As you can see, the share price on the 9th and 14th are the same. The number of shares are the same, but because they rebalanced on the way down, when it came back up, the value increased by $4. Very effective in a churning market. I don't know how it will do in a big Bull or Bear yet. Still testing that.

Interesting, huh?