Newbie with risk aversion

[29year]

I’m currently invested 78% in the G fund ( the most conservative) and 22% in the F fund. I will be contributing for 2 more years. I don’t expect to have to draw on this for 7 more years. I would like to know what your opinion is on how I should have my funds invested. I want to play it as safe as possible, but get a better rate of return than I’m getting now(2.78 last year :{). I can tolerate more risk than I am currently since I will have CERS and SS to fall back on. I just can't make up my mind. I realize that your advice is an opinion only and is not binding in any way. I realize that past performance does not guarantee future performance.
Thanks in advance.

 

[Frixxxx]

I’m currently invested 78% in the G fund ( the most conservative) and 22% in the F fund. I will be contributing for 2 more years. I don’t expect to have to draw on this for 7 more years. I would like to know what your opinion is on how I should have my funds invested. I want to play it as safe as possible, but get a better rate of return than I’m getting now(2.78 last year :{). I can tolerate more risk than I am currently since I will have CERS and SS to fall back on. I just can't make up my mind. I realize that your advice is an opinion only and is not binding in any way. I realize that past performance does not guarantee future performance.
Thanks in advance.

Can you clarify that you are CSRS or FERS?

 

[Skorcher]

Sounds like you are CSRS. In which case you are not as dependant on your TSP to pay the bills when you're retired.
With your time horizon and risk aversion, I would put it all in L-2020 or L-2030 and let the autopilot slowly move more of your TSP to the G fund.

 

[amoeba]

Sounds like you are CSRS. In which case you are not as dependant on your TSP to pay the bills when you're retired.
With your time horizon and risk aversion, I would put it all in L-2020 or L-2030 and let the autopilot slowly move more of your TSP to the G fund.

The L-funds are all screwed up due to the bear market in the I-fund, which the L-funds include. It's like poking a hole in a raft, just a smaller hole. I admit to doing some bottom-fishing in the I-fund and it has come up dry. Divergence between the C and I is something like 20% for the last 6 months. Ergo, do NOT do L-funds. None. Zero. Don't do it. How else can I say it? OK - here's how: "mistake".

if you want a bit more risk; put 1/4 in the S or C funds; keep the rest in G/F. F has some risk later next year due to interest rate changes, if that occurs., but it did well this year. Who wudda thunk?

 

[29year]

Actually I am FERS. I plan on retiring from my federal job in January 2017. I've chosen that month because I will be eligible for the social security bridge payments from my CERS account at that time. I will continue to work part time for five more years (I will be 65). I will then draw on my thrift savings plan. I plan on waiting until I am close to 70 years old before I start drawing on Social Security. I may switch those two around, depending on how well the thrift savings plan does and how much I wish to leave to my heirs. Outside of my retirement plans I am financially secure. All of this to say perhaps I have too much aversion to risk. But after watching the documentary" inside job", I became very wary of the stock market. Thanks for the replies so far and any future guidance you can provide.

 

[29year]

This is the plan that I worked out after studying a 10 year history of all of the funds. The bulk of my money is invested in the G fund. I plan on moving 60% of that money into the C fund. If the C fund takes a 37% drop like it did in 2008, it won't kill me. I'm currently paying 50% of my contributions into the G fund and 50% into the F fund. I will continue to do this to provide A safety backstop. I will keep a close eye on interest rates and if they start to rise I will move my money out of the F fund. Does this sound like a good strategy?

 

[SkyPilot]

It is a good plan if it is conservative and realistic related to your financial goals.

 

[flynaz]

It takes money to make money... That said I have been investing 100 percent of my tsp into the market following one of the premium services. It means watching the markets daily and making two or three moves a month. If done correctly you will always beat the G fund and the L incomes. Yes all your money is at risk, but knowing when to bail (stop loss) can make a big difference in how much money you can make. You can usually expect to make 1 - 2% a month. Some years are better than others. In 2012 I made over 12%, over 7 in 2013 and a record for me of over 24% in 2014! It's all about what you are willing to risk and if watching your money or buy and holding is your preference. Good luck with your investments...

I’m currently invested 78% in the G fund ( the most conservative) and 22% in the F fund. I will be contributing for 2 more years. I don’t expect to have to draw on this for 7 more years. I would like to know what your opinion is on how I should have my funds invested. I want to play it as safe as possible, but get a better rate of return than I’m getting now(2.78 last year :{). I can tolerate more risk than I am currently since I will have CERS and SS to fall back on. I just can't make up my mind. I realize that your advice is an opinion only and is not binding in any way. I realize that past performance does not guarantee future performance.
Thanks in advance.

 

[29year]

It takes money to make money... That said I have been investing 100 percent of my tsp into the market following one of the premium services. It means watching the markets daily and making two or three moves a month. If done correctly you will always beat the G fund and the L incomes. Yes all your money is at risk, but knowing when to bail (stop loss) can make a big difference in how much money you can make. You can usually expect to make 1 - 2% a month. Some years are better than others. In 2012 I made over 12%, over 7 in 2013 and a record for me of over 24% in 2014! It's all about what you are willing to risk and if watching your money or buy and holding is your preference. Good luck with your investments...

Excuse my ignorance but what do you use for this: "one of the premium services".

Also TSP administrators had warned participants several years ago against "day trading" in the TSP. Were they just trying to protect themselves?

 

[flynaz]

In 2006 I started following EBB .... And we were day trading, making inter fund transfers 2 or 3 times a week! I am saying we because there were several folks in my office alone doing this. If you followed EBB then you basically day traded. Now TSP limits your moves to Two times a month and always allows you to move a third time into the G for safety.. I jumped on board with Intrepid Timer from its conception and I am very happy with the results. This is the first year that I actually beat his goal by not following exactly his every move. In the past he has beaten me! But for the most part I follow his every move. I retired at the end of 2012 and plan on doing this for the long term to make my investment grow.

There are several premium services to pick from, just do your homework and be proactive.

Good luck


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[29year]

Sorry for the bother but my Google search for EBB did not return anything related to financial services.

 

[TSP4Soccer]

Sounds like you are CSRS. In which case you are not as dependant on your TSP to pay the bills when you're retired.
With your time horizon and risk aversion, I would put it all in L-2020 or L-2030 and let the autopilot slowly move more of your TSP to the G fund.

Good advice. I was in L2030 for a few years before I started moving my money around and had pleasant returns.

 

[Warrenlm]

Sorry for the bother but my Google search for EBB did not return anything related to financial services.

One of the this board's members called Ebbnflow and his "Ebbchart". As his premium service achieved success, and dealt heavily in the I Fund, I believe he received credit for affecting the TSP Board's broker's profit and causing the TSP Board's decision to restrict moves to 2 per month. Or did he have to share it with Tom?

 

[alevin]

I can't remember specifically whether it was Ebb or RevShark I had just started following, with substantial success, right before the 2-move limits were imposed, and just before both services went to paid-only. It was one of them. I hate the 2-move limits.

 

[29year]

I still haven't done anything. I'm watching the falling oil prices and the effect that it's having on the markets with great interest. Apparently the Saudis are trying to destroy the economic viability of our newly found oilfields. Should I consider a move into the international funds or just wait this one out?

 

[pmaloney]

Falling oil prices are not too bad for the US but is really bad for others like Russia, Iran and Europe. Most people I see and read say the US is the safer place to be so I stick with C & S mostly.

 

[DrFaustus]

Assuming you don't want to go with one of the premium services, one of the more valid strategies is to watch a high-flyer on the AutoTracker and mirror their moves.
Don't be afraid to follow someone else if the person you've been following is starting to experience some setbacks.

If you don't want to follow a single person, you can try averaging the allocations of the top 4 or 5 on the tracker board. This might not be as valid a strategy though as the average might fluctuate too much to keep up with it given the current limits on rebalancing your portfolio.

 

[Boghie]

This is the plan that I worked out after studying a 10 year history of all of the funds. The bulk of my money is invested in the G fund. I plan on moving 60% of that money into the C fund. If the C fund takes a 37% drop like it did in 2008, it won't kill me. I'm currently paying 50% of my contributions into the G fund and 50% into the F fund. I will continue to do this to provide A safety backstop. I will keep a close eye on interest rates and if they start to rise I will move my money out of the F fund. Does this sound like a good strategy?

29year,

• If you are worried about a market collapse like 2008 than all of your contributions should be going into the C/S/I funds. That is called 'Dollar Cost Averaging' and it works for you in an amazing manner during crashes. Buying 'G Fund' assets with your contributions is like putting money in the bank. It is safe but it cannot help you. As an example, in the depths of the market crash BirchTree convinced me to increase my contributions and put that money into C/S/I. From July 2008 through July 2009 I bought tons of shares of the 'C Fund' for 7$ to $14 bucks - now they are worth $26 bucks. Had I bought the 'G Fund' I would have paid between $12.50 to $12.91 - and those shares are now worth $14.62. The 'F Fund' could have been purchased for between $12.06 and $12.83 - and those shares are now worth $16.93. You want your contributions buying equities when they are at sale prices. I cannot ever think of a reason to be buying G/F with contributions unless you have skill in market timing.
• My money is that if the 'C Fund' moves as it did in 2008 you would bail. You then lock in losses and based on your discussion I seriously doubt you would reinvest in the market till the market reaches fair or frothy status. Isn't that what you are doing right now? We are probably right around fair value and things could tip either way. Back in 2009 we were seriously undervalued and you were too scared to get your money invested. Equities are NOT interest accounts. They go up and they go down - but they center on going up 9% - 11% a year. I doubt you could handle single day 8% moves to the down without bailing so I would not set an account the way you plan. If you want to play just build up a spreadsheet with your actual current balance and play day by day from 2008/10/01 through 2008/10/10. The market lost 23% of its value during those eight trading days. Your 'F Fund' bond holdings would have lost over 9%. Your account would have lost over 17% of its value in those eight days.
  
• Your 40/0/60/0/0 allocation is a terrible risk to reward mix. That 40% in the 'G Fund' will not buffer losses in the 'C Fund'. Your long term risk is about 9% while your long term return is about 4%. And, I would shade the risk up a bit. That means that with 3% inflation your account will adjust between -2% and +16% a year centering long term on 7%. The current 'Great Recession' was four risk factors strong meaning your account would lose about 29%. Right now you really don't have many good options in the stable funds. The 'G Fund' earns you about 2.5% while the 'F Fund' earns you about the same while simultaneously trading like stock. So, holding G is probably a better bet for the risk adverse than holding a stable bond fund that is not stable (look at the annual returns).
  
• Thus, I would look at a 60/0/20/10/10 allocation. And, yes I know the 'I Fund' is having problems but isn't that the time you should be buying. You could shade some of that I to C (60/0/25/10/5) and 'market time' a bit. Those allocations results in a Risk of 5% and a Reward of 3% meaning that in a normal year (67% of the time) you should see returns of between 1% and 11% centering on 6% incorporating an assumed inflation of 3%. In 2008 that allocation probably dumps you -14% for the entire draw down period (actually ending in March 2009). I think you could use Scouts spreadsheet to get the actual numbers.
  
• Finally, and most importantly, I think you should have a meeting with a good financial adviser. Not one who will sell you an annuity with your entire asset base, but one that will create a 'bucketized' allocation that will have safe money, intermediate investment, and long term investment. You are guessing now. And, now is not the time to push your chips into equities like you were a 40 year old. I am NOT a financial adviser. I am still young enough to make mistakes and because most of my investable assets are in TSP and not a self managed IRA I cannot really use a financial adviser at this point. You need one. You need safe money and invested money and you need an allocation that will not panic you in the next downturn. That takes work, knowledge and skill. If you do not have that skillset buy it...

 

[maui21ice]

Welcome to the site and congrats on being close to "the end!"