Interest posting to account for G fund

[jls3021]

I'm new to the govt, tsp and this website, but not new to investing.

How is accrued interest posted to a TSP members account? Are new shares purchased with accrued interest and added to holdings? If so, what is the frequency (monthly, quarterly...)?

I called TSP and was told that accrued interest is posted to accounts once per year. If she was correct, that sounds like a pretty lousy compounding factor to me. Was that person correct or just wanting to get me off the phone?

My thanks to anyone that can impart more specific knowledge of how the interest in G fund is actually accrued and distributed.

 

[mlk_man]

Welcome jls!

Your G fund acts just like the other funds. You're not actually earning interest per se. You are actually buying shares and they either decrease or increase in value. The G fund should never decrease in value and has been paying out it's share increase every 4-5 days lately. THis means your share prices should increase in value approximately .09% every 4-5 days and the increase would be available immediately if you wanted to do an IFT. The more shares you have, the more money you'll make.

 

[Gilligan]

I'm new to the govt, tsp and this website, but not new to investing.

How is accrued interest posted to a TSP members account? Are new shares purchased with accrued interest and added to holdings? If so, what is the frequency (monthly, quarterly...)?

I called TSP and was told that accrued interest is posted to accounts once per year. If she was correct, that sounds like a pretty lousy compounding factor to me. Was that person correct or just wanting to get me off the phone?

My thanks to anyone that can impart more specific knowledge of how the interest in G fund is actually accrued and distributed.

Interest is compounded daily, according to the TSP loan G Fund calculator. Once interest goes above 0.00999 it is added to the share price by raising the share price one cent. New shares are not purchased with accrued interest. At the end of 2005 the accrued interest was above 0.00499 so it was rounded off and they gave the G-fund another penny.

Back in 2003 the penny payday was about 2 weeks apart, now with a higher interest rate and a higher share price we are seeing the penny payday about 6 days apart.

 

[nnuut]

I remember getting 8+% in the "G" fun when it first started! I'd take that now!!:worried:

 

[VirginiaBob]

I'm a little confused about interest posting to the G-fund myself. For the last few days, the price was at 11.58 per share. I bought it at 11.58 per share, and sold it at 11.58 per share despite that I held it for 3 days, with no gain whatsoever. What if you buy it the day before it changes from 11.58 to 11.59? Do you get the full 0.01 point increase? If so, could be a useful strategy to gain more than the <5% that the G-fund yields. For example, buy when it is 11.58 now, then sell as soon as it reaches 11.59, put the money in stocks, then buy again right before it switches from 11.59 to 11.60. Is this feasible?

 

[EW_ret]

That is what some members do. Recently the G is paying $0.01 every Monday, so they move to G on Friday COB. But they could miss a big market up day on Monday.

Like Gilligan said there is no quarterly, or yearly, distribution to buy more G fund shares. This means the total shares you own can only increase by buying more with your paycheck, or by moving among other funds to get a gain, and then buy 100% G.