Monthly return rate - G

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James48843 said:
What kind of daily return is the G fund given now that interest rates have crept higher? Are we around 5% now? We should be.
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The interest rate for the G-Fund - and, in fact, Social Security Bonds - is set by a weird pension-like formulation. Kinda the way a floating annuity is set. It is not directly set by 'the market'. It should trail 'the market' as the FED rate rises. BTW, that could be a nice 'feature' for us greedy plutocrats. Let it ride up till it reaches the FED rate, buy in, and then enjoy as the fall is sticky.

I think the one we should be watching is our F-Fund. That is market set, but because it is a fund of bonds it is a big blah of a bunch of bonds at different stages in their maturity. It should rise till the average is higher than the FED Funds rate. Again, this may prove a boon to us 10%ers. Let it ride up, move lots of casholla in, and then smile as the higher interest bonds provide ongoing returns.

Right now, neither is good. G loses to inflation and F has yet to wash out the very low yield bonds. I think F yield is still only 4.76% and the weighted average maturity is over 8 years. It should be a couple of points higher than the FED rate.

*** WARNING: I've never been a bond guy. I am very much learning this stuff as we go along ***
 
Boghie said:
The interest rate for the G-Fund - and, in fact, Social Security Bonds - is set by a weird pension-like formulation. Kinda the way a floating annuity is set. It is not directly set by 'the market'. It should trail 'the market' as the FED rate rises. BTW, that could be a nice 'feature' for us greedy plutocrats. Let it ride up till it reaches the FED rate, buy in, and then enjoy as the fall is sticky.

I think the one we should be watching is our F-Fund. That is market set, but because it is a fund of bonds it is a big blah of a bunch of bonds at different stages in their maturity. It should rise till the average is higher than the FED Funds rate. Again, this may prove a boon to us 10%ers. Let it ride up, move lots of casholla in, and then smile as the higher interest bonds provide ongoing returns.

Right now, neither is good. G loses to inflation and F has yet to wash out the very low yield bonds. I think F yield is still only 4.76% and the weighted average maturity is over 8 years. It should be a couple of points higher than the FED rate.

*** WARNING: I've never been a bond guy. I am very much learning this stuff as we go along ***
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My financial advisor has moved me into short term bonds over the last 9 months because of the interest rates. I'm guessing he will be moving me out of these bonds before the end of the year. Off the top of my head, I don't remember the interest rates. I'd have to go look it up.
 
tsptalk said:
I don't think that's correct, actually. It's not including daily compounding. It's probably closer to 3.9%. I'll try excel. :embarrest:
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I calculated 3.83% if we assume the compound frequency is everyday including weekends, 365 days.
 
tsptalk said:
Current Loan rate 3.625%

Annuity rate 3.950%
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Thanks.

Ever since they changed the G fund makeup a few years back it’s been underperforming what it used to do. It used to be about the same as a percent higher the 30 year treasury. Now it’s always less than that- more like a fraction over the 30 year treasury.

But 3.65% isn’t that bad for a safety fund.
It’s better than it has been for a couple years.

Sent from my iPhone using TSP Talk Forums
 
It's worth allocating to all funds for diversification purposes. My TSP bond portion is proportionally 70% G and 30% F, so yes, I overweight G.

G operates more like a money market fund, but you can't get a bond fund like G anywhere else that's government backed.

As we've seen since 2020 in the bond market, F carries market risk. It has been a disastrous two years for any newly minted retiree drawing down their bonds (or stocks) to provide income. Usually that's not the case in a stock bear market, but we've also been in a bond bear, and that's a problem. The problem won't manifest itself for 15-20 years down the road though as those funds sold at a loss today will never have the chance to recover in the long run.

Unfortunately, TSP does not allow you to pick what fund you'd like to draw from. Ideally, you'd have wanted to draw from G the past two years, then gradually start selling CSI during the bullish times to get back to that target asset allocation. This is one good reason to export your TSP to an actual brokerage firm.
 
TommyIV said:
With that said, do you advocate the F-fund over the G-fund to hold cash not invested in stocks while investing for retirement?
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The F-Fund will continue to decline till the average yield is some margin greater than the FED Funds rate. The AGG yield is currently around 4.75% with an 8.5 year average maturity date. The FED Funds Rate is currently at 5.25%. This means that the new bonds going into the F-Fund will have an interest rate something higher than 5.25%. The Big Boys will not invest in bonds for free. So, wait. Buy in when the yield is at or above the FED Funds Rate. Just a guess, but...

Bullitt said:
It's worth allocating to all funds for diversification purposes. My TSP bond portion is proportionally 70% G and 30% F, so yes, I overweight G.

G operates more like a money market fund, but you can't get a bond fund like G anywhere else that's government backed.

As we've seen since 2020 in the bond market, F carries market risk. It has been a disastrous two years for any newly minted retiree drawing down their bonds (or stocks) to provide income. Usually that's not the case in a stock bear market, but we've also been in a bond bear, and that's a problem. The problem won't manifest itself for 15-20 years down the road though as those funds sold at a loss today will never have the chance to recover in the long run.

Unfortunately, TSP does not allow you to pick what fund you'd like to draw from. Ideally, you'd have wanted to draw from G the past two years, then gradually start selling CSI during the bullish times to get back to that target asset allocation. This is one good reason to export your TSP to an actual brokerage firm.
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Bullitt, I'm within three to six years of the Golden Watch. Right now, I am trying to allocate enough to G-Fund to pull my needs and wants out over seven years once I factor in 75% of both Social Security and Pension. Why 75% of what is promised - because SS wil pay out a bit more than 75% of promised even if they do not borrow to pay to promise. So, that is a safe bet for Social Security - and, our pension is 'invested' in Social Security bonds, so... . Anyway, that is my personal 'Lock Box'. What I was thinking of doing in my Golden (not Shower) Years was IFT to G before the monthly distribution and reallocate after. That way, the distribution is pulled only from the G. I don't know if that will work and it puts a limit of 1 forward IFT, but it is something I am looking at. I have no way of testing it.

The bummer is that I will never again be in sniffing distance for the monthly prize. Then again, I should never be within sniffing distance of the 'Big Booby Prize in the Sky' - some event like 2008 catching me in a slumber and losing half my mullah.
 
Hi, I was wondering what you would suggest a 68 year old, retired ATC'er with a very good pension and SS that covers all of my expenses should do with my TSP???. most advisors go with the "age Rule" 100-68 would be 32% stocks, 68% bonds and cash. With the "G" fund returning about 4% right now, it would seem logical to leave it all in "G"??, Thoughts?? TIA. Leigh
 
Hi skycophigh,

I don't really have a suggestion but as an FYI, the L-income fund, which is typically considered an allocation for retired folks and may not be aggressive enough for you, is currently allocated as follows:

G Fund 69.38%
F Fund 5.63%
C Fund 13.06%
S Fund 3.18%
I Fund 8.75%


So it's closer to 25/75 stocks to bonds and cash
 
skycophigh said:
Hi, I was wondering what you would suggest a 68 year old, retired ATC'er with a very good pension and SS that covers all of my expenses should do with my TSP???. most advisors go with the "age Rule" 100-68 would be 32% stocks, 68% bonds and cash. With the "G" fund returning about 4% right now, it would seem logical to leave it all in "G"??, Thoughts?? TIA. Leigh
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Like Tom said, it depends on how aggressive you want to be with your TSP account. You will have to start drawing from your account in about 4 years. So, something else to think about is how you will want to reinvest the monthly check you will be getting from TSP. That might help you decide what to do now. I'm guessing over the next couple of years the "G" fund will fall back to around 1-2% once we start moving out of this recession.
 
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