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Skooby's Account Talk
- Thread starter Skooby
- Start date
RunningFool
Member
Very good advice and information. Should be a must read for all who start on this board. Thank you.
I'm assuming "as much as possible." Equities have provided an average of 10-11% a year over the last 70 years. However, their returns can vary greatly, up and down, from year to year. Since you indicate you are comfortable with risk and you have a long time horizon, 30+ years, 100% equities would make sense. Over time, equities (C,S, and I) have out performed fixed income (G&F).
The two basic investment approaches are market timing and passive asset allocation. Most of the TSPTalkers are trying to time the market using technical analysis. Some have been successful. The majority are not. A passive Total Global Market allocation of 39% C Fund, 11% S Fund, and 50% I Fund is beating 70% of the posters in 2007. It's beating 77% of the posters over the last two years.
If you decide to go with a passive allocation, a Total Market Allocation (roughly mirroring the world market capitalization), is the best approach based on the Efficient Market theory and the notion that the best performing fund will vary unpredictably. In other words, the I Fund has outperformed the C and S Funds recently. However, which fund will outperform in 2008? Who knows?
If you decide to go with market timing, you'll have plenty of support on this board. However, you'll be going against academic theory and the advice of investing legends Warren Buffet, John Bogle, and Benjamin Graham.
A long investment horizon like yours, provides the opportunity to take more risk to achieve your goals. In other words you have more time to recover from bear markets, e.g. 2000-2002.
You have to take on risk to achieve high returns. There are no low risk, high return investment approaches. My personal goal is to achieve a S&P 500 return, e.g. 10-12%, at lower than S&P500 risk, 16-17% standard deviation. I do this by mixing higher risk assets (S&I Funds) with F&G Funds. I also "tilt" towards small and value stocks outside my TSP.
If you decide to engage in market timing, plan to spend considerable time managing your investments. If you decide to go with passive asset allocation of close to 100% equities, you'll beat 70% of the market timers with little or no effort and lower risk.
If you really want a "set and forget" portfolio that will beat the majority of TSP participants without any effort, go for the L2040. It will adjust your risk profile as you time horizon shortens.
Having said all of that, your current allocation doesn't look bad. The 35% allocation to the G Fund might be a little high for your age and investment horizon. However, 65% equities and 35% fixed income is certainly defensible and will get you the majority of the market return.
If your goal is 20% return per year - forget it. You might get lucky for a few years. However, it won't last. People who achieve 20% a year over a long period of time are investing legends, not government employees.
Finally, if you'd like to read up on why experts advocate passive allocation, pick up "The Four Pillars of Investing" by William Bernstein.
Good luck.------Jim
Yes i do plan on rebalancing. I'm just trying to figure out where to rebalance it and for how long.
Barney
Member
It sounds like we have a similar schedule except for the overtime thingy the gov't doesn't allow me to get.
Anyhoo, there is some pretty good discussion in I think it is the 'Questions' thread that talks about allocation and contribution. You might want to check it out.
I also have a PowerPoint that I put together about contributions. If you send me a PM with your e-mail address, I think you might like it. Right now your allocations sound like an L-fund - without the F-fund. Do you plan on re-balancing your allocations and how often? Let's start there.
Well, I'm 30 years old, so I won't be retiring for about another 30 years or so. I won't withdraw until then. How many hours? As many as I can, but I do work overtime and I am in school right now so it could get a little tight some weeks. I'm ready to make money, and I'm still fairly young, so I think I can take a some risk.
I'm not in the G. I'm contributing to the C(30%), S(30%) and I(40%) funds. I have contributed to the G before so I do have money in there right now.
Of my total balance I have:
34.70% in G Fund
24.97% in C Fund
20.03% in S Fund
20.30% in I Fund
Skooby,
1. What are your investing goals? In other words, what percentage return do you want/need to earn from your TSP account?
2. How many years until you start withdrawing from TSP, i.e. what's your investment horizon?
3. How much risk are you willing to take, i.e. how much can you afford to lose, percentage-wise, in a year? Note, #3 is directly related to #1.
4. How many hours a week are you willing to invest in managing your account?
Welcome to the board.------Jim
1. What are your investing goals? In other words, what percentage return do you want/need to earn from your TSP account?
2. How many years until you start withdrawing from TSP, i.e. what's your investment horizon?
3. How much risk are you willing to take, i.e. how much can you afford to lose, percentage-wise, in a year? Note, #3 is directly related to #1.
4. How many hours a week are you willing to invest in managing your account?
Welcome to the board.------Jim
Welcome to the board Skooby, we normally don't post account dollar value on the board. It isn't in your best interest, you know how the internet is. I edited your post for you. I'm sure you will get plenty of responses to your post.
Norman
ok. I'll say it like this then:
Of my total balance I have
34.70% in G Fund
24.97% in C Fund
20.03% in S Fund
20.30% in I Fund
My first post!
I'm asking everyone for some opinions on what I should do with my account. I'm still kinda new to the whole thing, so any thoughts are welcome. It doesn't seem like i'm gaining anything. Where should my funds be allocated?
Here's my account as it stands right now:
G Fund: $$,$$$ - Contributing 0%
F Fund: $$,$$$ - Contributing 0%
C Fund: $$,$$$ - Contributing 30%
S Fund: $$,$$$- Contributing 30%
I Fund: $$,$$$- Contributing 40%
Total: Approx $,$$$,$$$
-----------------------------------------------------------------------
Any tips on what I should be doing?
I'm asking everyone for some opinions on what I should do with my account. I'm still kinda new to the whole thing, so any thoughts are welcome. It doesn't seem like i'm gaining anything. Where should my funds be allocated?
Here's my account as it stands right now:
G Fund: $$,$$$ - Contributing 0%
F Fund: $$,$$$ - Contributing 0%
C Fund: $$,$$$ - Contributing 30%
S Fund: $$,$$$- Contributing 30%
I Fund: $$,$$$- Contributing 40%
Total: Approx $,$$$,$$$
-----------------------------------------------------------------------
Any tips on what I should be doing?
Last edited by a moderator:
