New to investing in TSP, looking for suggestions on how best to invest

[Maxwell]

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Hello. I am new to investing in TSP. At least in taking a more active role in investing in the different funds. I am one of the ones that just put 100% in the G Fund and just left it there. Now I am trying to gain a better understanding of the market and understand how best to invest in the different funds. Onequestion is that on the allocations page of this site showing the current percentage allocated in the different funds, I see that 100% is invested in the G Fund, however the G Fund is only at $10.74, whereas the S Fund is at $14.47 and the I Fund is at $15.65. At this time wouldn't it be better to invest in the S and I Fund? I believe I am missing something here. If someone would be so kind as to explain this to me so that I may have a better understanding, I would appreciate it. Thanks.

 

[Guest]

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Maxwell wrote:

Onequestion is that on the allocations page of this site showing the current percentage allocated in the different funds, I see that 100% is invested in the G Fund, however the G Fund is only at $10.74, whereas the S Fund is at $14.47 and the I Fund is at $15.65. At this time wouldn't it be better to invest in the S and I Fund? I believe I am missing something here. If someone would be so kind as to explain this to me so that I may have a better understanding, I would appreciate it. Thanks.

I think you're missing alot.

1. The allocations page is how Tom (Mr. TSPTalk) is allocating his portfolio at the present time. Other member allocations are listed in a different section. Each are acting to make the best of what they view is on the horizon.

2. The current price of the funds has no relevancy whatsoever. Your goal is to invest in the fund that will go up the most, percentage-wise (or go down the least.)

 

[Rolo]

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saraho wrote:

I think you're missing alot.

My, my, such tact! :x

[line]

Welcome, Maxwell!

Read about allocation, namely asset allocation, dynamic allocation, strategic allocation, and then you can better understand market timing. Market timing in theory, anyway, since nobody fully gets it in practise, but proper asset allocation always works.

Keep hanging out on the board here and read some of the older posts on allocation, particularly from a dude named 'Azanon'.

 

[tsptalk]

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Maxwell wrote:

Hello. I am new to investing in TSP. At least in taking a more active role in investing in the different funds. I am one of the ones that just put 100% in the G Fund and just left it there. Now I am trying to gain a better understanding of the market and understand how best to invest in the different funds. Onequestion is that on the allocations page of this site showing the current percentage allocated in the different funds, I see that 100% is invested in the G Fund, however the G Fund is only at $10.74, whereas the S Fund is at $14.47 and the I Fund is at $15.65. At this time wouldn't it be better to invest in the S and I Fund? I believe I am missing something here. If someone would be so kind as to explain this to me so that I may have a better understanding, I would appreciate it. Thanks.

Welcome Maxwell. To someone new, it must be strange to see me (tsptalk) in 100% G fund. I went 100% G fund just this past Friday and it may not last more than a couple of days to a week. The last time I was 100% G fund was in April of 2004. I spent the last half of 2004 almost exclusively in the stock funds. Stocks struggled the first half of 2004, and took off the last half. Do you see the strategy? Get in when things look good. Get out when they don't.

Tom

 

[Maxwell]

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Saraho,

As far as your statement that I am missinga lot, it is embarrassing to admit, but thetruth is thatyou are right. I am new to this and really trying to understand this a lot more. I appreciate your explanations. Where is it that you can view other member allocations? So let me ask you, as far as what Tomis allocating his portfolio, do you agree with the percentages or not?

 

[Maxwell]

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Thanks for the welcome. As far as your statement about, "My, my, such tact! :x", I appreciate the sentiment, but the truth is Saraho was right, I do think I am missing a bit, I don't fully understand about TSP and the funds, but I am definitely interested and willing to learn. I appreciate your tips and will definitely look into what you suggested. Any more tips would be greatly welcomed. Thanks.

 

[Maxwell]

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Tom,

Hello. Thank you for the welcome. I wanted to tell you that this is such a good site that you have here. For those of us out there that do not have much knowledge about TSP and investing in the different funds, your site is very beneficial and full of information. I have only briefly had the chance to go through what you are offering on this site, but this is such a help and giving me a better understanding of TSP. As far as my question of your current portfolio, I was curious about the 100% invested in the G Fund. Saraho briefly explained that it is not all about the current prices, which to be honest, is what I was under the impression that it was. To explain more, the past week or two, I have been making interfund transfers, previously from 70% in C fund and 30% in G fund to putting 5-10% in the S and I fund. The result being that my account balance has increased about $1,000. As opposed to one of my co-workers who just left her portfolio the way it was with percentages in C and G and therefore in the same time frame her account balance did not increase at all. So here is where I get confused, investing in the fund which has the highest price and increasing the percentage in those funds, thus increasing the number of shares has given me an increased account balance. Isn't this what we are all going after? To increase the account balance? What am I missing here in terms of that? So therefore, when I saw that you had moved 100% into the G fund and Saraho's comment that it is not all about the current prices, in fact that the current prices have no relevancy, has made me question even more what I am doing and that I do not have the proper knowledge in investing in these funds. After looking through your site and the information you have available, percentages invested in the different funds and the returns gained, Friday, I moved 100% into G fund. I figured, better safe than sorry, as this way I can't lose much. At least till I gain a better understanding, and plus I figured from what you and even others mentioned earlier as far as I fund looking good in January, but predicted to go down later on, the best bet looked to leave it in theG fund for now. The thing is, I am trying to understand, why this is. Why G fund, now, and why as you recently stated, onlya couple of days to a week? I will of course try to do as much research as I can, already I received a few helpful tips from some of the members of this site as from you, but any suggestions or tips would be greatly welcomed. Also, I saw that someone mentioned that the maximum interfund transfers was about 13, but I believe you said that last year you did a lot more than 13 transfers, is there any limit, presently can you do as many transfers as you want? Thanks again for the response, I look forward to hearing from you and the other members on this site.

 

[tsptalk]

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Maxwell -
I currently know of no limitation on the number of transfers we can make in a year. I make many transfers during the year, but some of our members make double and triple the number of transfers I make. Not that I recommend a lot oftransfers, but I haven't heard of complaints yet.

As far as share prices go in determining which fund to choose, I agree with saraho. It does not matter to me. I don't even take that into consideration. What matters to me is where I think the funds may go in the days, weeks and months ahead. If a fund price is high and my analysis tells methat fund can continue to do well, I will stay in that fund. If the price is low, maybe things are changing and it is time to buy. Or maybe it still looks bad and will continue to be bad. It is not the price that tells me this. It is my market indicators.

I hope that helps some. The bottom line is, it is not where the price is now. It is where is it going next?

Now wait until you read about sentiment and contrarian thinking. That one will really confuse you.

Tom

 

[Rolo]

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Maxwell wrote:

Thanks for the welcome. As far as your statement about, "My, my, such tact! :x", I appreciate the sentiment, but the truth is Saraho was right, I do think I am missing a bit...

hehe...ever see the series Moonlighting?

 

[Timer]

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Maxwell wrote:

"My, my, such tact! :x", I appreciate the sentiment, but the truth is Saraho was right,

Hi Max, welcome. Rolo had to say it, he's always poking Saraho's pigtails in the ink. Big crush that one. Now you're not missing anything :^. I can poke fun 'cause Rolo is a bud of mine.

 

[Guest]

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Maxwell wrote:

Saraho,

As far as your statement that I am missinga lot, it is embarrassing to admit, but thetruth is thatyou are right. I am new to this and really trying to understand this a lot more. I appreciate your explanations. Where is it that you can view other member allocations? So let me ask you, as far as what Tomis allocating his portfolio, do you agree with the percentages or not?

Dear Max,

The section entitled Member Allocations, Transactions and Returnslists other people's allocations. The section entitled Allocation lists Tom's allocation. You will see that we all rarely agree. Currently Tom is 100% G, while I'm 50% I, 20% G, 15% S and 15% I. What that tells you is that Tom is taking a more conservative bent for the near future than I am.

Keep reading...and asking questions...

 

[Maxwell]

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Tom,

Your explanation helps me out a bit, but doesn't fully explain why when changing the percentage of myallocations to the S and I fund within 1-2 weeks, why my account balance increased by doing that, as opposed to someone who had their allocations in C and G fund, made no change, and thus so no increase in the account balance. Also, what particularly made you decide to invest fully in the G fund now as opposed to having anything in the I fund presently.

Max

 

[Maxwell]

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Timer,

Thanks for the welcome.

Max

 

[Maxwell]

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Saraho,

Thanks for the link to other people's allocations, this gives me a better idea of what other people are investing in. It does not seem to be updated to the latest date as Tom's allocations are. I see somewhat that everyone does not really agree on what allocations that you allmake. Obviously there is no way to fully predict how these funds are doing, but what is it that most of you are basing your allocations in the different funds on? How can all of your predicitions be so very different. I see your proposed allocations for 1/23/05, and find your predictions for the I fund very interesting. I see you are taking more of a chance in investing in the I fund as opposed to others, and I see others are taking an even bolder chance in investing more than you in the I fund. From what you explained earlier, I was looking at the I fund incorrectly as to its share price, but I found my account balance seemed to increase from increasing my allocations in that fund. So basically from what Tom explained, what funds to invest in are what you are trying to predict, as best as possible, are which funds will do well in the future. But what is the end goal here, what do you look for, how do you gauge that you are doing well? I somewhat follow Tom's Financial utilities spreadsheet, and what I gather that you are looking for is the returns as opposed to the account balance, or I guess maybe in conjunction with the account balance, I am not sure. But what exactly are you looking for in terms of the returns? A good deal of the returns show negative numbers? So far how have your returns or overal account balance compared to other members, say Tom for example? Like I said before, Iobviously understand that there is no way to predict how funds will do in the future, everyone can just make educated guesses based on the information they have before them, but to a newcomer such as myself, if I were to look at each member's different allocation portfolio, how could I best judge who here has a better grasp on what funds to invest in and what not to. From what you mentioned in your previous messages you say that you are not a day trader, would you say that other members are, say Tom, for instance? Would that be one of the reasons for discrepancies between your two allocation portfolios? Thanks.

Max

 

[tsptalk]

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Maxwell wrote:

Your explanation helps me out a bit, but doesn't fully explain why when changing the percentage of myallocations to the S and I fund within 1-2 weeks, why my account balance increased by doing that, as opposed to someone who had their allocations in C and G fund, made no change, and thus so no increase in the account balance.

Maybe I don't fully understand the question because the answer seems too obvious. TheI fund did well over the last 14 days (up 32 cents) and the C and S were flat and down 6 cents respectively. Hence anyone in the I fund had a gain.

Also, what particularly made you decide to invest fully in the G fund now as opposed to having anything in the I fund presently.

That's what I talk about in the daily market comments ([url]http://www.tsptalk.com/comments.html[/url]). Take a look.

 

[tsptalk]

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Maxwell wrote:

Would that be one of the reasons for discrepancies between your two allocation portfolios?

That's what makes a market. Whenever you buy something, someone else has to sell at the same price. Who is right? We don't know until it unfolds. When we are on the wrong side of the market we have to decide if it is time to correct our "mistake" or if what we expect to happen is just going to take a little longer.

This stuff (frequent trading) isn't for everyone. You have to be flexible but at the same time you have to trust your indicators (once you decide which ones to follow). One key is to not let your ego get in the way. If you are make a changeunless you have a very good reason not to.

 

[Carp]

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Tom,

I've had a slight gain in the I Fund. I decided to take a risk..while most people were going to G a few weeks ago, I went 100% I. Plan on keeping 50% in I and 25 C/S by the end of he week.

 

[Guest]

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Maxwell wrote:

Saraho,

Thanks for the link to other people's allocations, this gives me a better idea of what other people are investing in. It does not seem to be updated to the latest date as Tom's allocations are. ....but what is it that most of you are basing your allocations in the different funds on? How can all of your predicitions be so very different.

Weenter allocation changes when applicable.Tom gives daily updates. All are up to date.The bases for the allocations vary depending upon timeframes and indicators.

 

[Rolo]

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saraho wrote:

Currently Tom is 100% G,... What that tells you is that Tom is taking a more conservative bent for the near future than I am.

...or it can tell you that he's mending that last BLACK EYE!



Timer wrote:

Rolo had to say it, he's always poking Saraho's pigtails in the ink. Big crush that one. Now you're not missing anything :^. I can poke fun 'cause Rolo is a bud of mine.

ROFL!!!

Hey...I dish it to anyone, so I'm fair game to anyone....'cept saraho...she's meeeean...and gots cooOOOoooties! That I Fund better take off or she's gonna be servin' me up some o' my own words...yummmmm... (and no, saraho, I was not implying that women should be in the kitchen serving me food or anything like that )

(Not that I would object to that...but as long as it is Buffalo wings or sumtin' rather than crow.)

saraho wrote:

Weenter allocation changes when applicable.Tom gives daily updates. All are up to date.The bases for the allocations vary depending upon timeframes and indicators.

...and personal style. Some of us are more speculative than others. Everyone's reasons and m.o. differ and should be explained in their respctive Account Talk topic.