Epic's Account Talk

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Epic (and others!),

I just joined the forum recently to start reading up on how folks utilize their TSP accounts. I've been active duty since 2012 and have saved up a good bit, but will be separating soon. Since there's been a lot of G fund rate discussion, and it is sitting relatively high right now, I was considering taking out a TSP loan. I'm currently invested in the L2050 lifecycle fund, which is ~11% G fund. The loan amount I'm considering taking out is equal to my account balance * 0.11, and I would then reallocate the remaining balance back into the L2060. This will be my "lazy" way of essentially distributing everything back out to a L2050-ish allocation, since the loan will be treated as the G fund portion of my current L2050 investment. The loan money, meanwhile, will be invested in long term US Treasury bonds (such as 4.3% for the 30 year bond).

What downsides am I not thinking about? It is a $50 application fee for the general purpose loan, I start my next stable career while I'm on terminal leave, and I have a good bit of savings which will allow me to repay the loan after separation. I don't need the loan money for anything, and don't anticipate any need for it in the future. I'm not really interested in taking on extra risk by just converting the entire account balance to L2060, even though I know it can offer a higher reward. For all intents and purposes, I don't see how taking the loan will change my long term account balance, but if someone else has projected out a similar scenario and sees a major loss in value, let me know!

Thanks!
 
Welcome trip! Thanks for joining us.

This sounds reasonable and probably won't make a big difference in your life either way. I know the "experts" say don't borrow from your 401K / TSP because you miss out on the growth, etc., but what if stocks go down after you pull money out? You saved money.

The other thing, and this is just an opinion and not mathematically sound, but we do have to live our lives. How many people save their whole life for retirement, then croak within a few years? It's not that uncommon, unfortunately.

Again, not traditional or financially sound advice, but I doubt you'll be on your deathbed wishing you saved more money. You sound like you're on the right track and I wouldn't sweat the move to take out a loan.

I'll let others chime in with an adult response. :D


trip32 said:
Epic (and others!),

I just joined the forum recently to start reading up on how folks utilize their TSP accounts. I've been active duty since 2012 and have saved up a good bit, but will be separating soon. Since there's been a lot of G fund rate discussion, and it is sitting relatively high right now, I was considering taking out a TSP loan. I'm currently invested in the L2050 lifecycle fund, which is ~11% G fund. The loan amount I'm considering taking out is equal to my account balance * 0.11, and I would then reallocate the remaining balance back into the L2060. This will be my "lazy" way of essentially distributing everything back out to a L2050-ish allocation, since the loan will be treated as the G fund portion of my current L2050 investment. The loan money, meanwhile, will be invested in long term US Treasury bonds (such as 4.3% for the 30 year bond).

What downsides am I not thinking about? It is a $50 application fee for the general purpose loan, I start my next stable career while I'm on terminal leave, and I have a good bit of savings which will allow me to repay the loan after separation. I don't need the loan money for anything, and don't anticipate any need for it in the future. I'm not really interested in taking on extra risk by just converting the entire account balance to L2060, even though I know it can offer a higher reward. For all intents and purposes, I don't see how taking the loan will change my long term account balance, but if someone else has projected out a similar scenario and sees a major loss in value, let me know!

Thanks!
Click to expand...
 
When interest rates are up (now) I barrow from myself. Whe interest rates are near zero, momma didn't raise no dummy.
 
trip32 said:
Epic (and others!),Thanks!
Click to expand...

Greetings Trip32

I've taken out several loans over the years, but I'm not up to date on the current rules. I might check on what the current loan rules are in regards to separation/retirement. You could be put in a situation where they will want the loan repaid within 60-120 days of separation, or receive a taxable 1099 (as I'm reading it).

For myself, I rolled it over so now I have access to lower expense fees and more flexibility in where the funds go. Hope this helps, good luck!
 
​I'm a little confused on this whole scenario, but I'll start with:
A) I've never dealt with Lifecycle funds (L-Funds).
B) I've never taken a loan out from my TSP.
So, you want to take out a loan from your L2050 (14.37% YTD) in the amount of what equates to the G-fund (5% current) portion of that account, and put that in long term US Treasury bonds (such as 4.3% for the 30 year bond). Then you want to roll the remaining amount into an L2060 (16.75% YTD), even though you said "I'm not really interested in taking on extra risk by just converting the entire account balance to L2060, even though I know it can offer a higher reward."
Is that correct??
There are some high yield Savings accounts out there that are paying 5.6% at the moment as an alternative to your Treasury Bond plan if you really feel the need to pull out that G-fund portion.
I don't know man. It's really easy to overthink things sometimes. Keeping things as simple as possible works for me and is a lot less stressful.
I do wish you the best of luck with whatever you decide to do. Sorry I can't be more help..... :D
 
​Well, I tell ya what...... I sure hope there's more of an opportunity to jump in next year with a sense of confidence instead of just trying your luck at the casino, and rolling the dice. You used to be able to evaluate the market direction by the facts and data, but now it's weather or not J.Pow wipes his nose in a certain way or has a certain "tone" in his voice. I wish we could just go back to fundamentals and have the market react in the current timeframe, instead of buying and selling like they know what it'll be like 8 months from now. Nobody does, and that's a little too sketchy for my liking. If I thought someone here had a handle on this and was consistent, I would watch them and learn, but of the current top 7 (below), 6 of them had negative double digit losses in 2022 (and one has no data for that year)......so it's pure luck. And when the market dumps, it dumps hard and fast, and can be devastating in some cases.

top7.PNG

Anyway.....sorry for the rant. :aargh4: LOL
I want to be in and I want to make money, but not in a market that reacts to BS signaling, manipulation, and crystal ball predictions from people that are simply just guessing. Too dam stressful. :blink:

Even though we don't have "Boots on the Ground", I thought this kinda fit seeing that we're involved to some extent in 2 wars at the moment. Yippie ! ! ! !

Xmas2023.jpg
 
10 minutes till the Open..... Good Luck !!!
https://www.investing.com/indices/indices-futures

FUTjan2.PNG

JE1.PNG


..
 
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