G Fund Return Process

[Builder]

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Do returns in the G fund actually accumulate by fractions over time, or only by a whole cent every +/- six days as the TSP share prices page indictes? If they are applied all at once against shares in the fund at a single point in time, it would seem to make sense to move all your money into the G fund for that one day each week, regardless of whatever else you are doing. Then move it right back where you were beforethe next day.

Just a thought after lurking on this excellent site for the past few months.

Cheers.

 

[tsptalk]

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Hi Builder - Thanks for joining us!

I had the same suspicion you have, that it's a fraction a day,but it actually appears that the price is a whole cent that is calculated against the number of shares you have. So I think your strategy would work. The draw back would be risking a real move in a stock fund. In other words, do you want a guaranteed penny and risk not making .05, .10 or more in the C, S or I? You would also have to time it right because it can be 5, 6, 7 or 8 days between increases for the G. You might be sitting in the Gfund for 2 or 3 days waiting for that ~ .1% gain.

I think if it's a choice between the F and G funds, it may be a good way to sway you to the G fund. But if anyone has any better ideas, please let us know.

Thanks,
Tom

 

[tsptalk]

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If they are applied all at once against shares in the fund at a single point in time, it would seem to make sense to move all your money into the G fund for that one day each week, regardless of whatever else you are doing.

Hi Builder. This is just what I was talking about. We got our penny in the G fund on Thursday but thebig 1.5% gainson the C and S made it look like a loss. :v
I was 65% G and hated it.

Tom

 

[Builder]

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Oh, there's no question you'd miss a few, here and there. But then watching the moves the last few months you miss a few anyway. Would still seem that if you could get the guaranteed 4-5% of the G fund AND grab some gains in equities on top of that you'd do well, particularly in the current market.Even if you missed a one day run up here and there.

Had thought the G fund was a fairly straightforward interest calculation that would allow a simple model of when the penny would be applied. Looking at how the fund operates, its not simple at all, hence the 5-7 day spread between penny gains. I'd only be comfortable with the strategy I was suggesting if you could pin down with some accuracy the ONE DAY you wanted to be fully in G. Right now I'm not sure that's possible.

 

[tsptalk]

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Yes, Iagree. If we knew the exact day it would be a good plan.

 

[The_Technician]

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I've been looking into the G fund returns.....trying to predict the day it would jump to the next level....

I did a linear regression over the past 350 days to get the % increase per day and then added the number of days past the last price increase to get a day that would possibly be the day that the fund would jump to the next return increase.....

I think tomorrow the 13th will be the next day....the fund will jump to 10.86.....and then 6 days later it will jump again to 10.87......

Lets wait and see if I got the days correct.....maybe we can predict when the pennies come our way.....:^

The Technician:dude:

 

[mlk_man]

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The Technician wrote:

I've been looking into the G fund returns.....trying to predict the day it would jump to the next level....

I did a linear regression over the past 350 days to get the % increase per day and then added the number of days past the last price increase to get a day that would possibly be the day that the fund would jump to the next return increase.....

I think tomorrow the 13th will be the next day....the fund will jump to 10.86.....and then 6 days later it will jump again to 10.87......

Lets wait and see if I got the days correct.....maybe we can predict when the pennies come our way.....:^

The Technician:dude:

I'm thinking Monday...............

 

[The_Technician]

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Can you explain why...?

 

[mlk_man]

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"Typically", the G fund pays out every 6 or 7 days. Monday would be the 6th day and the last time it paid on the 7th day.

 

[nnuut]

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I think tomorrow the 13th will be the next day....the fund will jump to 10.86.....and then 6 days later it will jump again to 10.87......

Hope it works Tech. I think it's got alot to due with the moon and tides. Varies between 4 and 7 days. :*

 

[The_Technician]

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The hound is on the trail Nuut....I think I've got it....we will try it out for several increases and see how she fairs....

Looks like the skipper lost his voice today telling the crew to "Bail Bail Bail!" trying to keep the boat afloat.....

Tomorrow is Friday 13th......and it don't look good from the past couple of days....but it could just play out even....the glass floor look likes its cracking and the eggs shells have all been smushed!!!

:dude:

 

[Guest]

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In June and July 2003 the G Fund paid the penny as much as 8-11 days apart.

 

[Guest]

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The Technician wrote:

I've been looking into the G fund returns.....trying to predict the day it would jump to the next level....

Has anyone called the TSP and asked how they determine when to increment the G-fund by a penny?

I assume they do it willie-nillie to keep people from being about use the penny-increase in their IFT decisions.

 

[Guest]

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Wonder Woman wrote:

In June and July 2003 the G Fund paid the penny as much as 8-11 days apart.

Yeah, that makes sense. The interest rate paid on the G-fund was lower then, so it took longer between the penny increments.

 

[nnuut]

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When things don't look too good I like to BAIL OUT to the "G" and get my penny. They know this. It's just like IFT's, no guarantee, 1 to 2 days. If they {TSP} wanted to they could make the schedule known, but this way there is no guarantee They are in the clear.:*I think they have variables too. The Gov'tmay belate on the paymentfor The "G" etc.. Don't see them late when I lose in the "C", "S", or "I"!!That would be nice and fair. WHAT! Listen to me!!!!!!:X

 

[nnuut]

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Yeah, that makes sense. The interest rate paid on the G-fund was lower then, so it took longer between the penny increments.

Jul 21th 2003 "G" Fund 10.04, May 12 2005 "G" 10.85--- What?:%

2003



July
0.30

2005

Apr0.37

I don't get your point Greg???o

Norman

 

[ckb21401]

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I think we need to know the interest rate to predict the penny day. The rate is the loan rate listed on the TSP site, but I don't have the data for what this rate was going back to June of 2003. If we can find pepople who took out loans and are are willing to report loan date and interest rate we might be able to piece all the data together.

Craig

 

[Guest]

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nnuut wrote:

I don't get your point Greg???o

All I was referring to is that if G-fund is paying 4%, then the number of days between when the penny is added to the share price would be ~50% longer than when it was paying 6%.

Ya'll probably already knew this. My statement was probably poorly worded.

 

[nnuut]

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Why?:%

 

[ckb21401]

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nnuut wrote:

Why?:%

Assume I is the daily interest rate and N is the number of days needed to go from $10.00 to $10.01.

Then we need to solve for N in

10*(1+I)^N = 10.01.

We get N = ln(10.01/10)/ln(1+I)

But ln(1+I) is about equal to I (using Taylor Series approx since I is very small), so we can simplify to

N = ln(10.01/10)/I

If I doubles, N will go down by a factor of 2.

Craig