Long Term Fund Allocation

[aerospec172]

I'm currently 26 and active duty Navy

I just started TSP and was wondering what would be a good fund allocation for the long term? Obviously, I will adjust my assest allocation over time but I was looking at something like 80/20 stock/bond?

I was thinking something along the lines of :

20% G
42% C
18% S
20% I

Or should I just go with the L fund?

 

[rokid]

I'm currently 26 and active duty Navy

I just started TSP and was wondering what would be a good fund allocation for the long term? Obviously, I will adjust my assest allocation over time but I was looking at something like 80/20 stock/bond?

I was thinking something along the lines of :

20% G
42% C
18% S
20% I

Or should I just go with the L fund?

The allocation you are proposing looks fine. It's aggressive, i.e. risky, however, you're young. Risk-wise it's a little less risky than the L2040 (15% G/F) and a little more risky than the L2030 (25% G/F).

The L Funds are rebalanced daily. Therefore, you don't need to re-balance. On the other hand, some people like to try to take advantage of momentum and re-balance after one or more asset classes have had a good run-up.

You can hardly go wrong with either approach. Good luck.-----Jim

 

[Birchtree]

For some people the name of the game is to accumulate shares. You can build a deeper position by going 75% C fund and 25% I fund and do the dollar cost average strategy everytime you dump money into your program. It will seem like you are pooring money down a well but everytime you buy you are getting better pricing and therefore more shares. Unfortunately, when you do this technique in a raging bull market you end up buying fewer shares because they cost more. Ride the cycles and let DCAing be the long term portfolio redeemer - it works.

 

[Pill]

Agreed with Birchtree -Dollar Cost Averaging is the way to go. In my opinion its simply one of the best ways to accumulate wealth. And from what I have seen it will beat any other style of investing over your given time frame. At your age and with this style of investing you don't need the G or F fund. However if you like buying on dips then have some in the G and F are ok. But timing the market is a loser for most.

 

[aerospec172]

so basically keep as assest allocation of 75% C and 25% I as the whole TSP portfolio?

Right now I'm contributing about 25% every month

I don't mind a bit of risk so I don't care about being heavy towards stocks but how long should I stay 100% stocks before I add some G or F?

I won't be trying to rebalance often or time the market ... I kind of what something I only have to check every 6 months to a year before making changes

 

[luv2read]

so basically keep as assest allocation of 75% C and 25% I as the whole TSP portfolio?

Right now I'm contributing about 25% every month

I don't mind a bit of risk so I don't care about being heavy towards stocks but how long should I stay 100% stocks before I add some G or F?

I won't be trying to rebalance often or time the market ... I kind of what something I only have to check every 6 months to a year before making changes

Then you should probably choose an age-appropriate L Fund. You can put some money in one of the other funds if you want a larger share of one of them, if the L funds don't give you the exact mix you want. I've done so on occasion and it works quite well.

 

[aerospec172]

I'll have to read up a bit more on the DCA cause I'm not to familiar with that system yet

 

[Pill]

You don’t necessarily need 75% C 25% I. However it’s not a bad position. I would do 50 C 20 S 30 I. L2040 is not bad either, but being a young man like me I would rather have the 15% that is in the G & F fund in stocks instead. Its personal choice and isn’t that big of a deal in my opinion. I plan to beat the 2040 every year. If I can’t then I might just get smart and climb aboard. My ROTH IRA is in a Target 2050 for the time being due to the volatility in the market and has been since the beginning of the year. Tom of TSP Talk has a long term commentary and allocation and he adjusts it twice a year. He has gotten great returns. http://www.tsptalk.com/longer_term.html also read this http://www.tsptalk.com/mb/showthread.php?t=3629&highlight=start

DCA is basically continuing to buy at a regular intervals (payday) regardless if the market is up or down accumulating shares. This method is proven to be a great strategy!

Hope this helps and good luck hope to see you in 30 years with Million!