G Fund

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G Fund penny chasing

For what it's worth, here's my imperfect-but-works-most-of-the-time :) penny chasing formula.

Check the G fund rate by the "Current Information" page on the tsp.gov website as soon as it is updated (around the end of the month). It's the same as the Loan Rate. Say it's 4.625%

I divide .04625 by 365 days to get int/day .0001267123288

Multiply the int/day by the current fund price ($11.71)
.0001267123288 x 11.71 = .001483013699 int dollars/day

Divide .01 dollars (the penny we're after) by the int dollars/day
.01/.001483013699 and it gives 6.74 days per penny of interest for the month. The 6.74 days is how long between penny payments.

So most of the time during the month shown it will be paid in 7 day increments with an unknown day paid after only 6 days.

I chart the "penny" days so that Sunday's penny is paid on Mondays and Saturday's penny is paid on Fridays. Holidays are paid the following business day. But, make sure you count all the days if you chart it out, just adjust the day it's paid on holidays and weekends.

I backed this method up for 8 months and it worked pretty well. I missed a couple times, but the miss allowed me to be right on for the rest of the month as you must compensate for the unknown payments.

Anyway, I think it's neat to get 6 or 7 times the G fund rate by being in just for the penny. Sometimes you'll miss or forget, but it works most of the time, but you can still chase the other funds when you're not penny chasing. I usually just move the whole mess to the 2030 L fund.

Good Luck if you penny chase.
 
Thanks for the explanation dusttimes. Good post! Most of us have figured that out but what we haven't figured out, and this would be a nice project for someone with some time to kill, would be to see what the gain of the other funds was on those days.

In other words, if we happened to time the G fund payouts perfectly, what gains or losses did we miss in the other funds on those same days?

That "in for the penny" strategy could be good for a buy and hold investor who plans to be in stocks all year anyway. But I use the G fund as a safe haven rather than a place to make money. That is, I use it in the opposite way. I stay in the G fund and and use hit and run tactics in the market when the outlook looks positive to reduce risk. It's not a day to day trading strategy but that is the basic theory - stay safe in the G fund until the investing environment looks optimal.

Normally that works well but not during a period when the market goes straight up for 6 continuous months like we are seeing now. The short-term outlook has looked very risky for months now but the market keeps moving higher. That's a great investment environment but a terrible trading environment.

But I digress. Back to the original message - Did anyone want to go back and track the return of the other, (C, S and I) funds on the days the G fund paid the penny during 2006, to see how it went?
 
See earlier on in this thread for to see what the difference between being 100% stocks buy and hold vs. 100% stocks except for penny days.

tsptalk said:
Thanks for the explanation dusttimes. Good post! Most of us have figured that out but what we haven't figured out, and this would be a nice project for someone with some time to kill, would be to see what the gain of the other funds was on those days.

In other words, if we happened to time the G fund payouts perfectly, what gains or losses did we miss in the other funds on those same days?

That "in for the penny" strategy could be good for a buy and hold investor who plans to be in stocks all year anyway. But I use the G fund as a safe haven rather than a place to make money. That is, I use it in the opposite way. I stay in the G fund and and use hit and run tactics in the market when the outlook looks positive to reduce risk. It's not a day to day trading strategy but that is the basic theory - stay safe in the G fund until the investing environment looks optimal.

Normally that works well but not during a period when the market goes straight up for 6 continuous months like we are seeing now. The short-term outlook has looked very risky for months now but the market keeps moving higher. That's a great investment environment but a terrible trading environment.

But I digress. Back to the original message - Did anyone want to go back and track the return of the other, (C, S and I) funds on the days the G fund paid the penny during 2006, to see how it went?
Click to expand...
 
G Fund Penny - just another tool

My basic investment policy these days is the L 2030 fund minus the F Fund component. The info I use is from the Flash video at
http://www.tsp.gov/lifecycle/flash/index.html. I just fastforward to the quarter we're in and invest as shown, but I eliminate the F Fund because I don't care for it's risk vs return. I divide the F Fund into equal amounts among the other Funds.

The G fund penny chasing only comes into play if I'm not real comfortable with the Modified L 2030 that I use. If I'm not that comfortable, and I've got a good idea that the penny will pay, I'll try to get into the G Fund for the penny day.

I use the penny decision just as another thing to throw into the mix. It certainly is an odd quark about this TSP system. Try and explain it to a TPS participant that does not invest much. They never believe you.

I think that chasing the penny every week will hurt more that help, but that's just a gut feeling. Some more data on this would be great, but I don't have the time or expertise to back all the numbers it.

DT
 
Re: G Fund Penny - just another tool

Dusttimes, see earlier in this thread to see that the G-penny does help rather than hurt, if you get it right.

dusttimes said:
My basic investment policy these days is the L 2030 fund minus the F Fund component. The info I use is from the Flash video at
http://www.tsp.gov/lifecycle/flash/index.html. I just fastforward to the quarter we're in and invest as shown, but I eliminate the F Fund because I don't care for it's risk vs return. I divide the F Fund into equal amounts among the other Funds.

The G fund penny chasing only comes into play if I'm not real comfortable with the Modified L 2030 that I use. If I'm not that comfortable, and I've got a good idea that the penny will pay, I'll try to get into the G Fund for the penny day.

I use the penny decision just as another thing to throw into the mix. It certainly is an odd quark about this TSP system. Try and explain it to a TPS participant that does not invest much. They never believe you.

I think that chasing the penny every week will hurt more that help, but that's just a gut feeling. Some more data on this would be great, but I don't have the time or expertise to back all the numbers it.

DT
Click to expand...
 
Oldcoin said:
We were due on 1-2-07 so a cent tonight would make sense.
Click to expand...
There is a pattern of 4 days then 5 days for the last 6 weeks, if that means anything it should be tomorrow unless the raise in the rate effects it, "Interest rate goes to 4.625% on 1/1/2007 (from 4.5%)

Craig"? Then what, today?:o
 
Looks like we got the cent today. I’m off kilter because of the days off and all…so my prediction for the next bump may be off. Any ideas?
 
To answer your question Nnuut....it could come as early as tomorrow, but I'm putting more stakes on the 10th....we seem to be going thru another rate adjustment so its sort of taking redirected change of pattern....and it looks like it has a trend to be a little delayed....
 
Oh, CARNAC the GREAT ONE what do you see?
Yes raised the rate last week and it was a 4 day duration. I haven't seen a 3 day in a long time!:D Opps the last one was 3 days.:embarrest: I guess 4 this time COB today!:worried:
 
nnuut said:
Oh, CARNAC the GREAT ONE what do you see?
Yes raised the rate last week and it was a 4 day duration. I haven't seen a 3 day in a long time!:D
Click to expand...

last week, nnuut,..3 day duration dec 27, 28, 29 2006...i agree with Tech, could be tomorrow, probably a percentage probability should be attached to this 'guess'. Tomorrow would be 4 day duration, my guess 25% prob, 5 day duration, 50% prob, 6 day 25% prob. I think I remember a 7 day duration??
 
Thanks FUTURESTRADER, I caught my mistake, but to late, i'm going with today!:D
 
The loan interest rate on the TSP site is now listed as 4.750%. Did anybody notice when it went up from 4.625% that they posted Jan 1?

Craig
 
Strange, I didn't know they could post an interest change in the middle of the month, but they did raise the rate. I picked the penny to be paid today, then each Tuesday for the rest of the month, but now....who knows...? May have to recalculate, but I didn't see which day the change showed up on. That makes it hard to figure. Maybe the rate shown on the 1st of the month really wasn't the correct figure.
 
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