L2040 vs L2050

[GUCHI]

i was just thinking about the L funds and had a question for the MB. the L2040 is currently selling at $21.90 and the L2050 is selling at $12.23. would it be wise to take my money from the L2040 and buy the L2050 and pick up twice as many shares? or does it not make any difference?

thanks john

 

[James48843]

i was just thinking about the L funds and had a question for the MB. the L2040 is currently selling at $21.90 and the L2050 is selling at $12.23. would it be wise to take my money from the L2040 and buy the L2050 and pick up twice as many shares? or does it not make any difference?

thanks john

Does not make any difference.

The share pricing is a result of the price at initial offering. The L2040 was created long before the L2050. Both contain a mixture of stocks, bonds, and G fund, the only difference is that right now the L2050 contains a little more stocks and a little less G fund. Over time the allocation is adjusted. But it really has nothing to do with the NUMBER OF SHARES one owns, or the individual price per share.

If the underlying stocks/bonds/ g-fund mix increases in value by 1% in a day, then it doesn't matter if it's one percent of a $12 share or one percent of a $22 dollar share. The bottom line is...it's still one percent.

Does that make sense?

 

[JTH]

i was just thinking about the L funds and had a question for the MB. the L2040 is currently selling at $21.90 and the L2050 is selling at $12.23. would it be wise to take my money from the L2040 and buy the L2050 and pick up twice as many shares? or does it not make any difference?

thanks john

This question is difficult to quantify in it's current form since essentially the L-Funds are just percentages of the GFCSI-Funds.

 

[James48843]

Here is a breakdown of the allocation of the underlying holdings of both the L-2040 and the L-2050. As you can see, the L-2050 has slightly more stock holdings and slightly less "G"fund holdings than the L-2040. Those percentages are tweaked every quarter. This is the April 2013 target percentages:

For the L-2040:




For the L-2050:

 

[Hybrid93Hatch]

I think it depends on how long you have to go until you retire. If you have several years, which I will guess you do since you are buying L2040 shares, then I would consider buying the L2050.

Here's why:

IMO it seems really odd the L2050 sits all alone at the now outrageous $12+ mark, when you have the other L funds (excluding the L Income) all in the 20+ per share range! I've been buying in the L2050 for quite a while and have watched it grow from single dollar digits (it dipped into the $8 range), but still remains well below all others. I can see the L2050 being a $20+ share in time (by the time I retire in 15 years), so that is where most of my shares are purchased! I mean you get more for your dollar than the pittly G fund, so I'm all over the L2050 (even though my plan is to retire in 2028)! If we knew the correct answer, we'd all be filthy rich by the time we retire

Hope this helps!

 

[Frixxxx]

If the underlying stocks/bonds/ g-fund mix increases in value by 1% in a day, then it doesn't matter if it's one percent of a $12 share or one percent of a $22 dollar share. The bottom line is...it's still one percent.

Does that make sense?

James,

I get this question all the time....Got it today as a matter of fact.

My issue is that performance is the driver, not the share price.

I think people get confused on the index, versus actual stock.

TSP~It's not the number of shares you own, but the amount of money you have in the funds. The fund performance is the key!

 

[SkyPilot]

i was just thinking about the L funds and had a question for the MB. the L2040 is currently selling at $21.90 and the L2050 is selling at $12.23. would it be wise to take my money from the L2040 and buy the L2050 and pick up twice as many shares? or does it not make any difference?

thanks john

"Shares" don't mean a thing... The L funds do not have a selling price... All the "share" price does is indicate how much that particular mix of funds in those percentages would have been valued on a particular day. One does not buy "shares" but rather allocates and IFT's by percentage among the GFCSI funds.

I wish they would remove this terminology... Also, the "L" funds, are not "funds" at all... but merely re-balancing composites of the Five Funds, those being GFCSI. Make your IFT's and Allocations based upon whatever market theory, plan or gamble you choose, but at least understand the system with which we are stuck in.