I'm 34 yrs old and plan to retire in 20-25 yrs from the BOP and I have 1 year under my belt and the whole time I used the Gfund, what would be the proper L fund to approach, I was reading more and more on this forum and i'm finding out that the #'s in the L funds mean years to retirement correct me if i'm wrong, also I changed from a Gfund to a L2040 and I think I might of chose the wrong Lfund because of retirement years. thanks
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L fund question
- Thread starter rcnells
- Start date
Frixxxx
Moderator
Welcome rcnells,
Well, I think you got the L funds figured out. The L is mainly for people who are retiring or retired and their money is relatively safe from the volatility in the market.
The other L funds represent the expected retirement (area) and base their risk depending on the duration of your planned retirement year.
If you look at the fundsheet on tsp.gov
http://tsp.gov/rates/fundsheet-lfunds.pdf
You'll see that there are "expected" returns based on which one you are in. So if you are retiring in say 25 years, then the way they explain it, as your get closer to your retirement, that fund will adjust your risk from higher to lower and you don't need to watch the market. These funds "roll down" and protect greater percentage rates as you get closer to your retirement.
Good Luck, and when you really get smart on retirement savings, would love to hear your strategy!
Frixxxx
Moderator
Good question, the L Fundsheets show how each level is invested. Because the L 2010 fund is 58% invested in the G Fund it will maintain a more consistent level as opposed to the other riskier allocations. Since the G fund constantly makes a profit, and it is the highest percentage rate invested, it will weather these storms better.Does anyone have any explanation as to why L2010 is doing the best among all funds? When all the funds are under $13, L2010 is still consistently above $13
TIA
Review the fundsheets for the best explanation.
Last edited:
Good question, the L Fundsheets show how each level is invested. Because the L 2010 fund is 58% invested in the G Fund it will maintain a more consistent level as opposed to the other riskier allocations. Since the G fund constantly makes a profit, and it is the highest percentage rate invested, it will weather these storms better.
Review the fundsheets for the best explanation.
In that case, shouldn't the L income be the best? The weird thing is all the L funds are a combination of the other funds, and if all the other funds are under $13, what combination would give L2010 a higher value than $13. I'll set up a spreadsheet to figure this out when I have more time :suspicious:
Silverbird
Well-known member
Frixxxx
Moderator
L income has 5% in I fund
L 2010 has 10% in I fund
Add in the voodoo math of fair valuation and you can quickly come up with the influence I fund has and why these two funds (not to mention all L funds) react differently.
When the funds were started in August 2005, there was a $.60 difference in share price between those two, now it's $1.00.
Remember though, L 2010 came down from 15.43 July last year while the L Income fund was only 13.32. (Share price difference ($2.10)
This shows that the L income's losses have been less than L 2010. That is why when you invest in the L funds you assume the risk/time of that fund.
Does this make sense?:nuts:
