Tsp deposit

[tspfl]

This might seem like a silly question, but since I can't find the answer anywhere...I will ask it.

Our TSP gets deposited the 25th of the month (direct deposit). If we made a change on the 27th of Aug.....just switching the future allocations to different funds, how does that work? We made it 40 G, 40F and 20 I...vs. 100 G. Again, this is for future deposits.

Lets say the "I"fund went down or up, what would happen to that deposit that will be made on the 25th sept?

Thanks in advance for any clarity on this issue.

 

[poolman]

This might seem like a silly question, but since I can't find the answer anywhere...I will ask it.

Our TSP gets deposited the 25th of the month (direct deposit). If we made a change on the 27th of Aug.....just switching the future allocations to different funds, how does that work? We made it 40 G, 40F and 20 I...vs. 100 G. Again, this is for future deposits.

Lets say the "I"fund went down or up, what would happen to that deposit that will be made on the 25th sept?

Thanks in advance for any clarity on this issue.

Whatever day the deposit is actually made you will get that day's closing prices per individual funds. Does this help ?

 

[SWAVET]

The allocation is for the future deposit as you already know. Allocation let you purchase new shares at closing price on the day that deposit such as 09/25 in your case.

 

[tspfl]

Ok...kinda

So what if, for example I deposit $60 on the 25th of Sept and the fund is in the negative?

1. Do I owe someone money?

2. Do I carry over a negative balance the next month, for the deposit on 25th of Oct?

I am new to all of this. We just kept everything in the G fund until enough was in there for us to feel cozy to change the future allocations. I am just not understanding what happens when a fund is in the red the day I purchase?
Thanks,

 

[JTH]

Ok...kinda

So what if, for example I deposit $60 on the 25th of Sept and the fund is in the negative?

1. Do I owe someone money?

2. Do I carry over a negative balance the next month, for the deposit on 25th of Oct?

I am new to all of this. We just kept everything in the G fund until enough was in there for us to feel cozy to change the future allocations. I am just not understanding what happens when a fund is in the red the day I purchase?
Thanks,

You have to seperate what you already own, from what you will be buying on the day your money buys EOB share prices.

 

[SWAVET]

No, you don't have a negative balance. When it is negative that mean you are buying low.

Share Price History:

https://www.tsp.gov/investmentfunds/shareprice/sharePriceHistory.shtml

 

[burrocrat]

just like at the grocery store, when you purchase a can of alpo you pay the price what's on the tag when you clear the cashier. red tags sometimes can indicate the item is on sale.

 

[nasa1974]

This might seem like a silly question, but since I can't find the answer anywhere...I will ask it.

Our TSP gets deposited the 25th of the month (direct deposit). If we made a change on the 27th of Aug.....just switching the future allocations to different funds, how does that work? We made it 40 G, 40F and 20 I...vs. 100 G. Again, this is for future deposits.


You can not think of your deposits as dollar signs. Your deposits buy shares in the allocated fund. Example: you deposit $100 into the C fund at $12.98 a share. Your deposit would add 7.0741 shares to your C fund.


Lets say the "I"fund went down or up, what would happen to that deposit that will be made on the 25th sept?

Again the money deposited in a certain fund only buys shares not dollars. The number of shares will change on the 27th depending on percentage in each fund and cost per share for that fund.


Thanks in advance for any clarity on this issue.

tspfl,

If this makes sense great. If still confussed let me know and I will try to give you a better example.

 

[tspfl]

On the TSP websit it has share cost, lets say it is 17.5737 the day I do my deposit on the 25th. But then the next day, it is 16.4833. I didn't really loose any money, right? Since I am buying and holding for that fund?

But if I wanted to do an IFT to switch it back to G, then that share cost would matter. I would have lost nearly 1%? I would want to wait until that cost is higher than when i bought?

Do you think the "I" fund is something to buy/hold or something to watch. If I wanted to buy/hold for 10yrs.

Ugh! There is so much to learn!!

Thanks again! I liked the alpo example

 

[Birchtree]

Since you are just starting your process of accumulating shares I would suggest a position in the fund that has been a laggard - this way your valuable money works harder buying cheaper shares. I'd consider the C fund. Sounds like a contrarian approach and it is - the C fund at some point will out perform - your hope would be not immediately. The higher these prices go the fewer shares you will purchase - and it's the number of shares you own that will dictate the potential gains in your later years.

 

[WorkFE]

buy/hold

Man, did you open up a can of worms with them words. Be gentle everybody.:nuts:

 

[nasa1974]

On the TSP websit it has share cost, lets say it is 17.5737 the day I do my deposit on the 25th. But then the next day, it is 16.4833. I didn't really loose any money, right? Since I am buying and holding for that fund?

The price per share went down so your overall account is less. You lose money only if you close out your account.

But if I wanted to do an IFT to switch it back to G, then that share cost would matter. I would have lost nearly 1%? I would want to wait until that cost is higher than when i bought?

This has a lot of variables and is a little harder to explain. If you IFT on the 26th from the fund at $16.4833 to the G fund at $13.8934 you would have a certain number of shares now in the G fund. Now you decide to go back to the original fund on the 29th at $17.0112 per share. You would own less shares in that fund now then what you had on the 25th. Make sense?

Do you think the "I" fund is something to buy/hold or something to watch. If I wanted to buy/hold for 10yrs.

Your TSP account is for the long haul. The I fund has had some very good years. Can't say what the next 10 years will look like though.


Ugh! There is so much to learn!!

That is an understatement.

Thanks again! I liked the alpo example

tspfl, You need to get this account in the mainstream to get more answers to your questioins. Good luck.

 

[tspfl]

Thanks for clearing all of this up!

 

[jimijr]

Once you set your percentage allocations, don't forget to rebalance periodically. This is the secret to buying low and selling high.

If you set (say) 15% of your balance in the I-fund, and the share value decreases, you now have less than 15%. By rebalancing back up to 15%, you have just bought more shares at the new lower price. If the percentage creeps above your desired 15% and you rebalance back down to 15% you will have sold some shares at the new higher price.

I do this every pay period. My new contributions go 100% into the G-fund, and on that day I rebalance to my desired percentages. This is how one buys/holds. I held my nose and did this all through the disaster of 2008/09. By March 2009, the turning point, I had a third more shares than I started with and thus climbed out of the hole a third faster than I went in. Result: my retirement is back on track.

Don't do nothing while holding, rebalance!

NB: This means never being 100% "in." Retain some cash in the G-fund. ("Keep your powder dry.")