IFT Question

[laserman]

Hello everyone I'm very new to this site and how it works so please bare with me.
I have a question concerning an IFT. I'll be retiring within the next few months and have the majority of my money invested in the G fund. Here's what I want to do for now. Move most of what I have in the G fund over to the L income fund. Will I lose money by doing so? The last time I checked the G fund was at $13.60 per share and the L Income fund was at $15.0006. I realize I'll have less shares but will that also effect the dollar amount in my account? I read somewhere on this site that it was better to have more shares than not. If I make this IFT I'll of course have less shares in the L Income fund than I do in the G Fund. Is that good or bad?

Thanks in advance for your reply.

 

[nasa1974]

Hello everyone I'm very new to this site and how it works so please bare with me.
I have a question concerning an IFT. I'll be retiring within the next few months and have the majority of my money invested in the G fund. Here's what I want to do for now. Move most of what I have in the G fund over to the L income fund. Will I lose money by doing so? The last time I checked the G fund was at $13.60 per share and the L Income fund was at $15.0006. I realize I'll have less shares but will that also effect the dollar amount in my account? I read somewhere on this site that it was better to have more shares than not. If I make this IFT I'll of course have less shares in the L Income fund than I do in the G Fund. Is that good or bad?

Thanks in advance for your reply.

To answer you first question, you will not loose any money. Example you have $100,000.00. At $13.60 a share (G fund) you would have 7352.9418 shares. At $15.00 a share (L fund) you would have 6666.4000 shares. So yes you would have less shares in the L fund but the dollar figure would stay the same. It never hurts to increase your shares in any fund, it just makes a difference on how you accumulate those shares. Is it a good thing going from the G to the L? It depends on what you are looking to do with your money.

 

[Birchtree]

Recognizing that we have been in a very strong bull market for at least two years - with plenty room left to gain on the upside. Why put your money in something that will not make your account grow. I'd consider the C fund full bore and get some reasonable growth without that much risk. You have to take some risks to get the gains. I'm retired and every nickle I have is in this market.

 

[KevinD]

Follow along so you can figure the second part of your question out.

Go to TSP.gov and on the home page, the second column is the "Investment Funds" column. Down a ways in that column is a link to "share prices." Click that link and look at the column for the L Income prices. As of Apr 21 the share price for the L Income is $15.0006.

That chart goes back to March 11 where the L Income price was $14.8507. By March 16 the price had dropped to $14.7389. If you were 100% in the L Income on March 11 your balance would have been less on March 16 even though you had the same number of shares.

I suggest you take your balance and use a calculator and divide it by the $15.0006 share price and see how many shares you would have. Then take that number of shares and multiply it by some of the share prices from the past that you can get off that chart and see what your risk tolerance is. The L Income fund gives you some exposure to stocks so you can make some money when it goes up but not so much exposure that it tanks when the market goes down.

Could you sleep at night if the share price got down to $14.0385 like it did on August 26, 2010? How about $13.0963 on June 9, 2010?

On the other hand it could go on up to $15.50, $16.00, $16.50 and beyond. Your balance WILL change. Whether it goes up or down depends on the markets.

 

[tsptalk]

I read somewhere on this site that it was better to have more shares than not. If I make this IFT I'll of course have less shares in the L Income fund than I do in the G Fund. Is that good or bad?

Welcome laserman!

I have seen that written here as well, but the number of shares is meaningless when moving, or comparing, one fund to another. The only thing that matters is the percentage increase or decrease in the price of the fund.

If you have $100,000 and Fund A is $5.00 a share and fund B is $20.00 a share, you would get more shares buying Fund A, but that does not matter.

If both fund A and fund B go up 10%:

Fund A would gain $0.50 a share to make it $5.50.

Fund B would gain $2.00 a share making it $22.00.

In either case your account balance would be $110,000 after the 10% gain. No difference no matter how many shares you had of either fund.

 

[RealMoneyIssues]

Welcome aboard laserman. This is a great site for learning !!

 

[laserman]

Thank all of you very much for you're help. I'm sure I'll have more questions in the near future.

 

[nnuut]

Welcome to the Message Board laserman!
Best of luck.
Norman

 

[Sensei]

I know I've seen this question in other threads, in other months such as this, but since this particular thread is called "IFT Question", I'm going to be repetetive and ask again:

Since Monday is the first trading day of May, if we are out of IFT's for April, do we have to wait until COB Monday to put in an IFT to anything other than G? In other words, if I want to move from S to I, and I'm out of IFTs for April, what will happen if I go to the TSP site and try to make an IFT before noon Friday?

 

[tsptalk]

I know I've seen this question in other threads, in other months such as this, but since this particular thread is called "IFT Question", I'm going to be repetetive and ask again:

Since Monday is the first trading day of May, if we are out of IFT's for April, do we have to wait until COB Monday to put in an IFT to anything other than G? In other words, if I want to move from S to I, and I'm out of IFTs for April, what will happen if I go to the TSP site and try to make an IFT before noon Friday?

It should tell you that you can't make that move. After 12 noon ET on Friday 4/29 you can make the IFT, but it will be effective COB Monday 5/2, and you'll be in the new fund for Tuesday trading.

 

[Sensei]

It should tell you that you can't make that move. After 12 noon ET on Friday 4/29 you can make the IFT, but it will be effective COB Monday 5/2, and you'll be in the new fund for Tuesday trading.

That's what I thought. I remember we had this situation going into the new year. I recall a couple people posting that tsp.gov let them make the IFT effective after the Friday close so that they'd start the new year with a new allocation. Maybe those people weren't actually aware of the number of IFTs they had left, or something.