L-Funds the way to go?

[Dave M]

Update

The standings, out of 66 accounts tracked:

L2040 27/66
L2030 30/66
L2020 34/66
L2010 45/66
L-Inc 50/66

For most of us, the L2040 would be an improvement. Fourteen people have made 20 or more IFT's this year, i.e., they're trying hard, and yet still trail this fund.

Dave

 

[Spaf]

Re: Update

Do we know what the average age is of the 66 members being used as a comparison?

The standings, out of 66 accounts tracked:

L2040 27/66
L2030 30/66
L2020 34/66
L2010 45/66
L-Inc 50/66

For most of us, the L2040 would be an improvement. Fourteen people have made 20 or more IFT's this year, i.e., they're trying hard, and yet still trail this fund.

Dave

 

[CountryBoy]

It really gives a person pause, don’t think that I haven’t thought about the L2040 returns since the report came out. :worried: I’ve made just a shade over 10% return on my TSP since the beginning of the year, although I’ve just been putting my allocations up in the last month or so. Heck, it would be easier just to put the money in , just not as fun or andrenaline pumping of course. :nuts:

The one reason, and I’d like to hear anymore, for continuing to make allocations based on information presented here, is that during downturns in the market, you can get out and then buy back in when you think the market is low enough for you. 11.47% is an impressive return, especially when my goal is 10% per year. I guess you can pop out of the L2040 also, but then that would seem to defeat the purpose of the L Fund. FYI, I’m 52 and 8 years from retiring, given todays environment.

I'm still wallering this thing around in my mind.


CB

 

[James48843]

You know, the more I look at the L2040- the better it seems to look.

I'm up about 18% for the year , but it took a LOT of work and worry to get that, and I really have a very hard time beating the L2040's consistant returns.

I may just park everything in L2040 for a while and enjoy the ride.

Today govexec.com has a good article on TSP,, including word that now 365,000 people are invested in L funds, and that total fund investments are approaching 200 billion dollars.

See the article at: http://www.govexec.com/story_page.cfm?articleid=35042&dcn=todaysnews

(for the record- I'm 46, been e fed for 12 years now, and have another 14 to go before I can afford to retire, unless I get this TSP thing rolling better...

 

[James48843]

I'm still looking at the fine returns stacking up by the L40- balanced between stocks, bonds and G, it continues to do very well- even better than I have been able to produce this month being split between the three stock funds.

I have two TSP accounts- one military (Guard), and one civilian. I am now retired from the Guard, so only have about 2K in that one. But today I have decided to move that one all into L2040, and let it ride, and see how that one does for a while. Based on what I see, I may just end up putting a big chunk of my regular account into 2040- as that one seems to be very positive with a great balance on the risk/reward factor for me.

 

[James48843]

Note:

12-month rolling average for L funds now beating stocks in general:
Last 12 Months
(9/1/2005 - 8/31/2006)
L2040 11.47%
L2030 10.55%
L2020 9.95%
L2010 8.65%
LIncome 6.28%

Thats pretty darn good.

 

[Spaf]

I agree the L-funds are pretty darn good!

However, investors still need to manage their accounts, L-funds or not.

Correct me if I'm wrong. The L-funds tend to optimize risk vs age. Or somewhat of a middle path along a bell curve. The L-funds can only do so much. i.e., they can't keep up with extreme conditions such as strong advances or strong declines. Thus the risk vs age factor. They are for folks that do not want to manage their funds. Is this a contradiction, yes it is!

Here's what I know: The 2000 NASD crash was a titanic disaster to buy-an-hold investors. Can it happen again...possible. Our energy dependance, is like sitting on a keg of gun powder.

IMHO, Anyone in stocks/bonds should know how to reasonably manage them, i.e., selecting good funds, evaluating risk, cost, etc., and minimizing any loses.

Auto-pilot can not evaluate a poor flight plan, nor will it steer clear of thunderstorms.

 

[fedgolfer]

Note:

12-month rolling average for L funds now beating stocks in general:
Last 12 Months
(9/1/2005 - 8/31/2006)
L2040 11.47%
L2030 10.55%
L2020 9.95%
L2010 8.65%
LIncome 6.28%

Thats pretty darn good.

Is James AKA Gary Amelio 11.47% is great for the apathetic investor, supposedly 95% of Feds and 401K participants. But I'm sure there's several people on this board that have returned 11.4% since June of '06 by being active, taking calculated risks, and getting defensive in overbought markets. Just making small talk and still shaking my head after that Amelio/Causey interview.

 

[Birchtree]

The advantage all funds have is the concept of DCA - it's the great redeemer for a participant with a longer term horizon while getting educated or otherwise prepared. For example: if an investor did the DCA routine all the way up into 2000 that's not really a problem because they were buying less at the most expensive prices. While on auto-pilot to the downside the DCA allows one to purchase more shares at lower prices enjoying the pain along the way. The longer we bump on the bottom the more shares that are accumulated. When the next cycle starts the process repeats until at some point with enough shares on board the risk outweighs the buy and hold - then it's time to be proactive or go into a safe harbor. A simple strategy for the busy employee. But I wouldn't bother with L funds - your accumulation position becomes too thin. There is more bang for the dollar buying 1 selected fund.

 

[cruisecontrol]

I'm retired. I jumped 100% into the L fund at the first opportunity. If my plan works, I won't have to touch TSP for another 7 years...begin mandatory withdrawal.

While, I'm satisfied with the early results, it doesn't hurt to watch the competition. We rolled my spouse's non-TSP 401k into a couple of target retirement funds and will watch them over time to see how they perform vs. TSP. Rollover IRA is always an option.

My only wish for the L funds is that they would shorten their time intervals to 5 years instead of the current 10. Fidelity, for one, started their Freedom funds with a 10 year interval and later changed it to 5 years.

Cheers!

 

[Birchtree]

Cruisecontrol,

If you want you want to make some serious money in the next 18 months dump everything you own into the large caps like the C fund. The current price of the C fund is $15.17, still cheaper than the others which allows you to buy more shares. $0.38 more and I'm up $2.00 this year. For me that's hefty dollars. Think about the potential and stick you neck out some.

 

[cruisecontrol]

Thanks Birchtree.

I was big into the C fund for a good part of my working years...and the return on that helped me get to where I could sit back and watch my balance grow slowly but surely in retirement.

Getting back into C in retirement is a risk I don't need. Can't move new money into it to replace losses...except my traditional IRA which I already rolled into TSP.

My long-term view is that if I could understand the market well enough to get ahead of the wave, I could have given up my day job long ago.

 

[Birchtree]

Cruisecontrol,

Being retired presents you with an opportunity many don't have - it's called cash. Learn from these assortment of members and you can trade or pistol shoot your way into a more comfortable retirement. All you need now is an iron stomach and a full fledged bull market. I'm waiting one more year and then I pull out my own well oiled dual pearl handles - go Palladin.

 

[Fivetears]

Can't move new money into it to replace losses...except my traditional IRA which I already rolled into TSP. My long-term view is that if I could understand the market well enough to get ahead of the wave, I could have given up my day job long ago.

Follow the top dogs advice, take an active approach learning to aggressively manage your TSP/401k and stay active on this board; you'll turn 6 figures into 7.
Even in retirement. With minimal risk.