Whereislotus Account Talk

[whereislotus]

Hello, I just found your web site while searching the internet for suggestions on how to allocate my tsp account to handle the falling dollar.

Here's my allocation
55 % into the I fund
35 % into the C fund
10 % into the S fund.

Does this sound like a good allocation for the falling dollar? I usually don't modify my allocation too often and have only done a interfund transfer once in my seven years. I have about 35 years until I retire.

I just visited
([URL="http://www.fedsmith.com/articles/articles.showarticle.db.php?intArticleID=1163"]http://www.fedsmith.com/articles/articles.showarticle.db.php?intArticleID=1163[/URL])
and he recommends taking any money in the I or S funds and putting the money in the bond fund known as the 'G' fund. Is that a good idea

Any suggestion would be appreciated.

thanks,
joe

 

[Birchtree]

Re: TSP allocation for falling dollar

The falling dollar has certainly benefited the I fund over the last number of years - but all things change at some point. I think we are about to see some behind the scenes dollar support with dollar intervention in the form of G-7 country purchases. They have done these interventions in the past so it's best to be prepared. More C fund and less weight to the I fund for me.

 

[Bullitt]

Re: TSP allocation for falling dollar

The dollar has been going south for a few years now. People are just starting to take notice because of the value of the Loonie against the Greenback. Don't read too much into it. The easy money has been made in the I Fund already. You'd just be chasing performance. Unless you make IFT's daily, the ebb and flow of the dollar means nothing. Birch summed it up. Get long C Fund.

 

[whereislotus]

Re: TSP allocation for falling dollar

Hello all and thanks for responding to my post. So should I transfer all my money in the I fund into the C fund? Also, do you suggest I make my allocation 100% C fund?

thanks,
joe

 

[RunningFool]

Hello, I just found your web site while searching the internet for suggestions on how to allocate my tsp account to handle the falling dollar.

Here's my allocation
55 % into the I fund
35 % into the C fund
10 % into the S fund.

Does this sound like a good allocation for the falling dollar? I usually don't modify my allocation too often and have only done a interfund transfer once in my seven years. I have about 35 years until I retire.

I just visited
(http://www.fedsmith.com/articles/http://www.fedsmith.com/articles/articles.showarticle.db.php?intArticleID=1163)
and he recommends taking any money in the I or S funds and putting the money in the bond fund known as the 'G' fund. Is that a good idea

Any suggestion would be appreciated.

thanks,
joe

My advice is either stay where you are or park your funds in the L2040 or other L fund until you can figure out the investment plan you understand and are comfortable with. Try different things in the tracker to see how they work without changing you actual allocations. Read all the good information available on this and other TSP sites. Your present DCA allocation has probably served you well the past seven years do not be too quick to abandon it.

 

[Uptrend]

No Assuming you seldom make allocation changes, I would choose a mix of the TSP funds for better balance. Normally (but not always) when the stock funds go up, the bond market (F fund) goes down, and vice versa. So, on a day when the stocks are losing the bond fund diminishes the loss because it may be rising. Therefore you would definately want F in the mix, but at a low level, say 10% of your total allocation. I would not load up on all C, because the small caps (S) has done very well in recent years, and the weak dollar will propel more international sales. I see small caps companies having stock appreciation until the dollar recovers. Since the dollar index looks to be oscillationg on about 7 yrear cycles and the dollar was high in 2002, looks like recovery may start in 2009, if history repeats. Keeping some G is advisable, depending on how much risk you are willing to take in the market. Bottomline: keep a mix; heavier to stocks and light on bonds and some G for risk tolerance. Good Luck.

 

[Bullitt]

No don't go all in one Fund unless you plan on making IFT's on a regular basis. What I'm saying is that I'm sure most of your peers at work are telling you that the I Fund is the place to be based on it's past performance and China. I Fund has had a great run and may be due for a pause. Buying large amounts and holding it now would be considered buying near the top. Quick tidbit, I Fund has zero exposure to China (which none of my co workers seem to realize).

A balanced account is best for your situation. For an example of what I'm talking about, Tom has a great 'long term strategy' that he updates a few times a year on the homepage.

 

[whereislotus]

Should I do a interfund transfer?

Hello, I normally don't do interfund transfers but here is my current percentages in the TSP funds:

G FundGovernment Securities 7.78% F FundFixed Income Index 0.00% C FundCommon Stock Index 29.17% S FundSmall Cap Stock Index 32.29% I FundInternational Stock Index 30.76%

Should I decrease my amount in the S fund, maybe transfer some to I or C?

I have about 35 years until retirement and I like to be aggressive.

thanks,
joe

 

[Birchtree]

Re: Should I do a interfund transfer?

I think you have a good set up right where you are - be right and sit tight.

 

[Uptrend]

Re: Should I do a interfund transfer?

Depends what kind of trader you are. If you seldom do transfers, your spread is not bad. I probably would put a little more in F, say 10%. The F normally (not always) goes in the opposite direction of the stock funds, so when the C, S and I are down the F may be up. You can think of it as a buffer. F is sensitive to inflation risk however.

For limited transfers, watch the summer. The majority of appreciation of stocks occurs between Nov - April. During the summer season you may consider moving more of your balance to F/G.

As an alternative, you could watch what the active traders do on the automated tracker on this site, and imitate their moves. Happy Trading!

 

[Steadygain]

I would say that is an excellent - long term (35 year) retirement plan. Don't think you're missing out by not doing frequent Inter Fund Transfers because you are way ahead of most of this site's members.

The minority (including myself) still have an overall decent return and a few are close to 30%. Tom has now lost 5% of his total TSP and he is as intelligent as the ones at 30% and frequently uses charts and various informative reports.

Making frequent Inter Fund Transfers can do more harm than good. The main advise I could give is: We have been in a very long bull market for the past 5 years and the news regarding the economy has been very bad for the past few months and projected to get worse. The dollar is falling to record lows and the overwhelming odds are a huge correction or major recession will be needed to turn things around. When we go into a recession - shift to 100% G and wait it out. I know many who never change their allotments that lose all their previous gains by the end of the bear market.

 

[whereislotus]

When you say shift to 100% G fund, are you saying transfer all my money into the G fund and change my allocation to 100% too?

thanks,
joe

 

[Reactive1]

Well, with 35 years to go you could easily just dollar cost average in the stock funds and not even worry about it. Personally, I would be a little more active than that, but there would be nothing wrong continuing in the stock funds. The problem is, that also says about a person that they aren't watching what's going on in the world, which I don't advocate. To me, why have your money stuck in a free-falling stock market when just a little more than a passing interest in the financial markets could have saved you thousands of dollars? I also would not want to be so totally exposed to the stock market as your allocation is. The F fund, for example will be very good as it always is when the prime interest rate is falling. While the market gets all in an uproar that no future rate cuts are coming, I guarantee you they will. I would probably suggest to you a 20% across the board allocation, that gives you some shelter from total exposure and also buys off some of the losses on down times. In October 87, the Crash, the stock market lost over 20% of it's value in one day. I think you always need some protection against that, which does happen from time to time. Total exposure is unwise to me.

 

[FUTURESTRADER]

I would probably suggest to you a 20% across the board allocation, that gives you some shelter from total exposure and also buys off some of the losses on down times.

Go with the retirement applicable L fund vs. a 20% split.

In October 87, the Crash, the stock market lost over 20% of it's value in one day. I think you always need some protection against that, which does happen from time to time. Total exposure is unwise to me.

The '20% crash in one day' has happened ONCE in the past 20 years, and curbs were put in place because of it, virtually preventing the reoccurance.

 

[Steadygain]

Joe, thanks for the question (and for making note of my post). The answer is absolutely YES - when we go into a recession (which is now expected to be a Depression) - Transfer everything to G -100% and have all contributions go to G as well.

Down the road when the Markets finally level off and bounce back you'll have the maximum money to buy at the best possible price.