Less than 1 Percent Option (read only)

[Guest2]

Re: <1%IFT Option

That's a great sample and a big help Nasa, Thanks !

Note: This document opens with Microsoft Excel and can be
found within the Microsoft Office Suite. If you don't have the
Office Program, you can download a FREE version called Excel
Viewer from the Microsoft Web Site. The drawback to the free
viewer is; "it only lets you view the document and not edit it with
your specific dates and numbers".

 

[Guest2]

Re: <1%IFT Option

Thanks SB. Judging by this it sounds like the IFT goes into effect before the closing prices that day.

By the way, I'm sure I'm not alone when I say; "we'd love to hear from
you, should you decide to do a <1%IFT" That goes for all the membership.
There's no such thing as a stupid question and the answers may help
others who struggle with this concept. So please feel free to stop by
at any time. Even if its just for a "Drive-By Hello"

 

[Aule Mar]

Re: <1%IFT Option

I think I understand how it works, but how do you actualy make the IFT. Do you make an IFT but leave the percentages as they are, forcing the system to recalculate them. (isn't that considered an IFT even though you didn't change anything??) or are you actualy injecting money into the TSP by changing your payrole allotment.
Its not clear how you actualy doing the mechanics of it.
Thanks

 

[nasa1974]

Re: <1%IFT Option

I think I understand how it works, but how do you actualy make the IFT. Do you make an IFT but leave the percentages as they are, forcing the system to recalculate them. (isn't that considered an IFT even though you didn't change anything??) or are you actualy injecting money into the TSP by changing your payrole allotment.
Its not clear how you actualy doing the mechanics of it.
Thanks

AM, You are talking about a <1% IFT, correct?

 

[Aule Mar]

Re: <1%IFT Option

Yes! You said there were no dumb questions
Thanks

 

[nasa1974]

Re: <1%IFT Option

Yes! You said there were no dumb questions
Thanks

There are no dumb questions. Sometimes the answers do not make sense.

You make a <1% IFT just like you would a normal IFT. As long as your pecentages are between .01 and .99 you can either round up or down your percentages. Remember when you make an IFT it has to be whole numbers and equal 100%. You will find a better explaination if you go to the last page and read the first couple of responses. We are all here to teach and learn. Keep asking questions.

 

[Guest2]

Re: <1%IFT Option

"how do you actualy make the <1%IFT"
Just like any other IFT. By going to the TSP web
site and changing your percentages.

"Do you make an IFT but leave the percentages as they are"
You can leave the percentages as they are, but remember,
if your percentages show a number greater then OR less then
a whole number you can increase the percentages up to the
next whole number. ie... 1.01%--->2.00%,,,0.99%--->1.00%

"isn't that considered an IFT even though you didn't change anything"
Yes, every <1%IFT is considered a IFT, even if you keep the %'s
the same. By keeping the percentages the same, your treating
the account just like an L Fund and simply rebalancing your total
account to reflect the same percentages for the next day. Shares
will increase or decrease depending on the market going up or
down on the day you do the <1%IFT.

"are you actualy injecting money into the TSP by changing your payrole allotment"
Your taking new money from your paycheck and purchasing shares at
the closing price, on the day it actualy goes in.

"Its not clear how you actualy doing the mechanics of it"
As Nasa said in the previous post, check back and read the previous posts.
If you can't find the answer you seek, my thread has alot of information
"Squalebear's Account Talk" buried within it. But that will take alot of
searching. A better suggestion would be to keep asking questions.

Please do not make any decisions concerning your account by doing a <1%IFT until you have a firm understanding of how this affects your share amounts, dollar amounts and risk. This method was designed by me to beat the (G) Fund, in lieu of going to the (G)arage. But there's a good chance that you can still lose money while attempting this. Should you reach your goal on the very first day, it may be a better idea to flee this method and jump back into the (G) Fund before its too late.

 

[steveg]

Re: <1%IFT Option

squalebear --

Thanks to your help I did my first <1% IFT today! With the market looking like it will finish down pretty good today, I would possibly have bought some into C if I had any IFTs left. So, I did the <1% trick!

Balances before the IFT:

6.94% F
5.68% C
2.11% S
2.06% I
83.21% G

Balances after:

7% F
6% C
3% S
3% I
81% G

Not a big deal, but it is interesting nonetheless...

Steve

 

[Guest2]

Re: <1%IFT Option

squalebear-- I did the <1%IFT trick!

Balances before the IFT:

6.94% F ----->7%
5.68% C----->6%
2.11% S----->3%
2.06% I----->3%
83.21%G---->81%

Not a big deal, but it is interesting nonetheless...

Steve

The "trick" is still in the timing and not in the method. You say, "No Big Deal",
but I beg to differ with you. You took 2.21% (maybe even more) out
of the (G) Fund and bought shares with it at a cheaper price. Don't
tell anyone :nuts: but your not suppose to be able to do that !
Good Luck !

 

[KevinD]

Re: <1%IFT Option

<1% Guide <- Click Here!

 

[Guest2]

Re: <1%IFT Option

To Whom This May Concern,

Welcome to April and the New Quarter.

We all have 2 unrestricted IFT's from now until the end of the month
and i couldn't help but think of all the possible strategies one might be
using while in this most unpredictable market. But that my friends, is
up to you.

When it comes time to make the decision as to whether you want to
Bail out of the Market, one might consider this little method of mine.
If that time comes and you decide to use the <1%IFT method, I want
you to consider the following;

#1) Although you only need one Risk Fund to do a <1%IFT, if you start
with only one, your stuck with only one until you utilize your Future
Contribution Allocations to add new money from your paycheck back
into a different fund.

#2) I tend to utilize 3 (C,S,I) or 4 (F) of the Risk Funds for diversification
purposes. Just as it's documented by the experts, a well balance portfolio
will help ease the agony of a down day. But it also lowers possible gains
on a up day. Should I feel stonger about Bonds I can reduce my stock
holdings and possibly boost my Bond holdings. But I will never reduce my
holdings below 1% unless I've given up on that fund and submit that fund
to the (G)arage.

#3) My first move might be considered extremely aggressive, but It's my
Second Move which is most important to the <1%IFT Levels I may want
before the month is through. This is evident in my March IFT's which can
be seen on the AutoTracker. But for those who don't have access, here's
the moves I made in March;

1st = 0-0-0-0-100
2nd= 50-10-5-10-25
3rd = 92-4-2-1-1
4th = 89-4-3-2-2
5th = 93-4-1-1-1
6th = 93-4-1-1-1 (rebalance)
7th = 89-5-2-2-2
8th = 100-0-0-0-0

Please take note that my 2nd move, although above my <1%IFT Levels, it
gave me the diversification I seek. This can be done at <1%IFT Levels as
well, but the point is this----> Your second move MUST include what ever
funds you want available for your eventual <1%IFT goals. On my 3rd move
I officially announced that I reached my <1%IFT Levels and started my
attempt to beat the (G) until I pulled the plug and bailed back to the (G)
Fund on my 8th move.

#4) There will always come a time when you will end up at a crossroad.
The (G) Fund does NOT lose money. This method CAN lose money. There's
no shame in accepting defeat at these levels. If the market hits the skids
and it becomes highly unlikely that you'll beat the (G) Fund, then by all
means, Jump Out before you suffer weeks of (G) Fund loses. March gave
me +0.4951% over and above the (G) Fund returns for the same 9 trading
day period,,,,OR,,,,10.68054 weeks of (G) Fund Returns. That gave me a
whole month that I could sit in the (G) and still be ahead. My goals are
not lofty. Even though I was playing with their money (casino reference)
I try to always remember that "Pigs Get Slaughtered".

#5) Last but not least, please remember that sometimes, the right move
is NOT making any move at all. Look ahead at all the data thats coming
out and STILL do your homework. You just might allow your percentages
to go above a whole number and gain the ability to boost that fund up
by nearly 0.99% in a few days. Sometimes the Market will not want you
to do that by getting really ugly. But this is something I weigh out before
making a move.

#6) Making a <1%IFT on the same day as your Future Contributions are
kicking in is still a mystery to me just yet. I haven't done one and don't
know which takes priority over the other. So, I avoid doing so for now.

MAY WE ALL SEE A GREAT AND PROFITABLE APRIL ! MARCH WASN'T ENOUGH !

 

[justbizness45]

Re: <1%IFT Option

SB, as a junior Jedi I will try to help. Hope you don't mind.

Medic let's make an assumption that you have made your 2 IFTs for the month on the 10th (any given month you wish) but you had the foresight to follow SB's example and your allocation COB on the 10th was 85G, 5C, 5S and 5I. Now on the 11th the market went up a little and at COB on the 11th your actual allocation at COB based on C/S/I going up is 84.5G, 5.2C/5.1S/5.2I (you have to look on the TSP website the morning on the 12th at your account balance to see the your account allocations on the 11th closing). The market went up so your overall allocation changed due to the change in dollar value of your shares in C/S/I and your .02% G increase.

Now you have 3 choices. You can:

1) Let it ride and do nothing (not wanting to risk more if the market turns).
2) If you think the market is going to go down you can take some off the table by going to a lower percentage and capture some profits for example 90G/4S/3C/3I (or 100G if you want) or you can just go back to the original allocation of 85G/5C/5S/5I. Or anywhere in between. You are moving shares from C/S/I to G when you do this.
3) If you think the market will go up you can INCREASE your allocation by going 82G/6C/6S/6I and buy more shares.

Every morning you can look at your actual share allocations and either round up or down based on what you think the market will do to the next nearest whole percent every day as long as your total allocation equals 100%. You can make or lose money.

There is a lot of stategy that can be implemented in this to help beat the G. Think about it and ask questions if you still don't understand. A similar strategy can be implemented in a downtrend market to DCA into it, however I prefer to go 100G in that circumstance.

Hope this helps, JB45

 

[Guest2]

Re: <1%IFT Option

The Basics:

If you invested 10% into a Fund and that Fund goes UP, the next day you
should see your percentage change in that Fund (unless the gain was too
insignificant to register an increase) ie.... 10%-------->10.02%

That 10.02% will allow you to do a <1%IFT and Boost it to 11.00%
-----------------------------------------------------------------------

If you invested 10% into a Fund and that Fund goes DOWN, the next day
you should see your percentage change in that Fund (unless the loss was
too insignificant to register a decrease) ie.... 10%-------->09.98%

That 09.98% will allow you to do a <1%IFT and Boost it to 10.00%
-----------------------------------------------------------------------
Where the money comes from will depend on what you did with all the
Fund during the <1%IFT. This get alittle more complicated to explain,
so I'll just stick to the Basics for now.

 

[Guest2]

Re: <1%IFT Option

The Basics:

If you do a <1%IFT when your Fund has 2.0% (whole number) AND you
enter the same exact 2% before noon, this is called rebalancing (just
like the (L) Funds do). Your forcing the percentages to stay the same,
no matter what the market does during the day that you made the
<1%IFT. At the end of the day, different things will happen;

a) The Fund Closes Up. Instead of 2.01% being in your account the next
day, you have only 2% again. So you removed that .01% from that fund.
You'll be re-buying shares in that fund. Whether you see an increase or
decrease of shares in that fund will be determined on how well or bad
your overall account does, as your buying 2% of your New Updated
Account Balance and putting that money back into that fund.

b) The Fund Closes Down. Instead of seeing 1.99% in your account,
you'll see 2% again on the next day. You've repurchased shares at
the lower closing price and added shares to the fund. Yes, you had
a loss on that day and this will not change by doing a <1%IFT. But
your accumulating shares on a down day. I tend to wait for two down
days before pumping the percentages up. Some might refer to this as
DCA'ing (Dollar Cost Averaging).

 

[KevinD]

Re: <1%IFT Option

REMEMBER! Your first 2 IFT's are your 2 IFT's for the month. Don't waste them on a <1% move.

 

[Guest2]

Re: <1%IFT Option

REMEMBER! Your first 2 IFT's are your 2 IFT's for the month. Don't waste them on a <1% move.

I couldn't agree more. Nicely put, Thank Kevin !

One last point, there are members so close to retirement OR who are
actually in retirement who've opted to utilize this method to enhance
there accounts, without exposing themselves to high risk. Those who
utilize this method for those purposes may have goals to do a <1%IFT
as their only strategy and thus, start the month off at <1%IFT levels.
Everyones circumstances and goals are different, but one MUST know
that ANY IFT counts towards the 2 per month limit. Even a <1%IFT.

This additional commentary came out of a conversation with a fellow
staff member WHO STILL thought his first move back to the (G) did
not count towards the 2 per month limit. IT DOES. If your in a Fund
and your first move for the month is to move money back into the
(G) Fund from that Fund, IT COUNTS ! Public Service Announcements
should come from the FRTIB, but we all know thats not happening !

 

[nasa1974]

Re: <1%IFT Option

"Originally Posted by WorkFE <1%IFT Guru's,
Just out of curiosity. Is it not true that whether the market goes up or down is irrelevant. By rebalancing dailey to your initial numbers you win.
Either you move small gains into the G or you replenish shares at a lower cost. Seems to me you don't have to put alot of thought into it. When you are out of IFT's.
As a reminder if you did this yesterday you used an IFT, <1% or not.

It is simplicity at its best.

Actually it is not that simple. There are a few factors that affect your daily balance in both shares and dollars. I will try to put a much better explaination together either later tonight or over the weekend. I want to make sure the explaination makes sense. The one thing to remember is that everything takes place at COB that day. Your account balance, shares and percentages all take place and adjust at the end of the day and you are making a best guess before noon EST."


I worked on a couple of scenarios of <1% vs Buy and Hold using the 2009 numbers through March. I started the 2009 investment year with $100,000.00 in all scenarios. I can post my worksheet if anyone would like to see my work in total. Now on the <1%, I already had the up and down days right in front of me so it made my choice much simpler than if I would have made up my mind before noon EST. However, I will say that you pretty much knew on a day to day basis how good or how bad the day was looking before noon.
My <1% I started at 80,5,5,5,5 GFCSI. I maintained a steady 5% in the F fund (not a big fan of F). I used the G and F funds to purchase shares in the CS&I funds all the way through March. My first Buy & Hold I also used 80,5,5,5,5. My second Buy & Hold I used 30,35,35 CSI. My next three Buy & Holds where 100% C, S & I. Again I started out every January with $100,000.00. Remember the higher the percentages in each fund the greater the risk.

I made a total of 31 IFT's January through March. In March 4 days could have gone either way.
-----------------------------------------------------------------------
Scenario #1 - <1% 80,5,5,5,5 $100,000.00 Starting shares per fund;

G-6278.2029 F-399.4759 C-454.3302 S-400.1537 I-343.6851

At the end of March the shares looked like this;

G-3467.6553 F-384.1063 C-1685.9437 S-1437.1840 I-1386.2542

A difference of; G-786.5365 F-14.2221 C-326.8606 S-270.2538 I-348.3617

At the end of March the account was worth $97,424.41 for a loss of $2,575.59.
-----------------------------------------------------------------------
Scenario #2 Buy & Hold 80,5,5,5,5 GFCSI

At the end of March the account was worth $98,371.36 for a loss of $1,628.64.
-----------------------------------------------------------------------

For scenarios 3, 4, 5 & 6 January and February where negative months and March ended positive.

-----------------------------------------------------------------------
Scenario #3 Buy & Hold 30,35,35 CSI

At the end of March the account was worth $85,572.43 for a loss of $14,427.57.
-----------------------------------------------------------------------
Scenario #4 Buy & Hold 100 C

At the end of March the account was worth $86,295.76 for a loss of $13,704.24.
-----------------------------------------------------------------------
Scenario #5 Buy & Hold 100 S

At the end of March the account was worth $87,481.59 for a loss of $12,518.41.
-----------------------------------------------------------------------
Scenario #6 Buy & Hold 100 I

At the end of March the account was worth $83,043.26 for a loss of $16,956.74.

 

[nasa1974]

Re: <1%IFT Option

Thanks Nasa for the Hard Work !
From your post (as with Lady, I hope I got it right):

I can't help but think that given enough time, when share prices ultimately
reached their original January Price, the Buy & Hold (Scenario#2) would be
left in the dust. Further, the "break even" point in dollars would come that
much quicker because of the accumulation of more shares.

Again it has to be mentioned that even using the <1% option increases RISK over staying in the G fund. But depending on how thick skinned you are it can also have it's rewards.
I will add some more information to my spreadsheet that will show a daily profit/loss for all the scenarios and then post the spreadsheet. It may help.
SB, Using the scenario #1 and #2 above you are correct. In a post below I mentioned how the scenario #1 improved by $3,370.89 (do to the increase of shares) the first three days in April. Scenario #2 over the first three days of April increased by about $800.00.
I have to mention that if the first three days of April had been negative then scenario #1 would have lost more money compared to scenario #2 because of the higher fund percentages.

 

[nasa1974]

Re: Using <1%IFT Option within IFT trading limit

A question:

Will the use of the '<1% IFT' technique count as one of the IFT trades toward the limit.

That is, let us speculate that I have two IFT trades remaining but do not want to make a major allocation change. Namely, I want to keep my powder dry and move 3% into equities on a specific day or range of days.

Can I use the '<1% IFT' technique for a number of transactions while keeping the big cahuna IFT transactions available?

The <1% option counts as an IFT. If you had 2 IFT's for the month and did a <1% move that would count as one of your FRTIB sanctioned IFT's. Then you would be left with only one IFT for the month. For a better explaination on the IFT and the <1% option go to the last page in this account and read the first couple of posts.
Any more questions do not hesitate to ask.

 

[nasa1974]

Re: <1%IFT Option

Here is the spreadsheet that I used for the <1% and the Buy & Hold numbers. It was a large file so I had to break it down into smaller ones. Dang 244KB limit. Enjoy!!!:nuts: