"Kudo's" to you for doing the most important things:
1. You are saving for retirement
2. You are putting away 10% of your income
3. You are in the stock market
4. You are interested in learning more about the markets and in managing your money
I don't know that it is really important as to the % you invest in each of the C, S, & I funds. Some in each of these funds will probably serve you well, due to your age, and the number of years you have available to work and to contribute to your 401K . Since we are in a bull market, and you are young, being 100% in the market would not be considered a bad risk.
Over the past 10 years all 3 of these funds has had an average return of between 7% -11%, even with the horrible year in 2008. It has been my experience that in a bull market, they all do well. In a bear market, I tend to be in some combination of G & F.
stasel, Thank you very much for your much needed assistance. I was actually browsing through the AutoTracker's Top 10 this month earlier today and noticed that most people put 100% of their distribution into 1 index. I also noticed in your signature, you say you have yours 100% in the "I" fund. I have mine staggered in different funds, mostly because I currently lack the ability to make an educated change, although I am attempting to fix my ignorance with this site and many others. Anyways, I was wondering if I could get a little explanation as to why you are currently invested in the "I" fund? Is it because of something you heard on the news about the international market or maybe some research that you have done? I'm not (at all) questioning your decision, only trying to get more information on how to make a well thought out IFT to the best possible fund. I understand what indexes each fund mirrors, just a little confused on research methods (sorry but im a total noob). Thank you very much in advance for your response.
Just a point of clarification -- I am in the "S" fund. My reasons for being in the "S" fund vs the "I" fund, have to do with the lagging recovery in Europe and the strength of the US dollar, and our inability to do more than 2 trades/month. In general, a strong US dollar will mitigate gains in the international markets. Here's an example of how the strength of the US dollar affects international funds.
Strong Currency Example
As of the beginning of 2011, the U.S. dollar has been weak against most of the world currencies. An example showing the effect or a weak dollar can be reversed to indicate the effects of a strong dollar. In 2009, the Brazilian stock market -- BOVESPA -- gained 69.7 percent in terms of the Brazilian currency -- the Real. When the results are converted to the dollar, which weakened over 2009, U.S. investors saw a total return from the Brazilian stock market of 126 percent. The portion of the gain to U.S. investors due to a weak dollar was over 50 percent. If the trend between the dollar and Real reversed, U.S. investors could see their investments drop in dollar terms, even if the Brazilian stock market shows gains. Read more:
How Does a Strong Dollar Affect International Mutual Funds? | eHow
I have been in the "S" fund all year (with the exception of one week in May). The decision to get out of the market in May, as it turns out, was a mistake -- an "emotional" decision. I keep reading and feel that we are due for a correction (10%) and I would like to avoid this if I can. But what I have learned is that it is very hard to do this with only 2 IFT's/month.
Keep reading, keep asking questions. There's a lot of talent/experience here at TSP talk.
Best of luck!
Have fun while you're here.
