newbie here and confused - tsp allocations

[n.shift]

ok. ill try to keep this short as possible. I don't want to bore the mighty wise people that I hope read this and give advice. I'm 42years old. been in the tsp system for 6.5 years. I hope to retire at 62 giving me only 26 - 27 years of service. I'm only at 5% contributions which until TODAY was all going to "G" fund. I have right around 20k measly dollars in it. My annual income is only 55k so its been hard for me to get up up past 5%. virtually no raises since started due to pay freezes. Hopefully that will change soon. Most people I work with are retiring soon with 30 years of service and seem perfectly content with 100k - 150k in their tsp ...Call me greedy but I want more, lots more. But this is where the confusion sets in. Since I have 20 years of service left, I'm willing to go all in. GO BIG OR GO BROKE ATTITUDE!..I'm trying not to focus much on the thought about stocks being at record highs and really have nowhere else to go but down but still willing to go all in. I HAVE NONE, ZERO, ZILTCH EXPERIENCE with stocks, bonds and investments at all. But I do know that the "G" fund is not going to do it. What are your thoughts on these 2 options I have came up with: either straight into the L2050 fund because its little more aggressive then the L2040 or something along these lines: (G-6%, F-2%, C-55%, S-37%, I-0%). I cant bring myself to invest in the "I" fund because 1. I'm doing good to grasp all the American terminology and how this stock market works 2. don't like what I been seeing from morgan Stanley capital international. This just seems a little to risky for me as I am more confused about that particular fund then I am the rest. i understand there is no set formula, suggestions, advice and no magic bullet for everyone as everyone situation is different. But if you where 42, had 20 more years to go and only have $20k to start, what would you do? thanks in advance.

[Relevant]

Be patient. Stay conservative at least for the short term. Regardless of my personal analysis and opinion I'm not finding many folks on this sight all out Bullish. A few are doing some short term trades but most seem to be in a watch and see mode.

There is nothing wrong with scaling in over time. If you feel bullish, go 10% S-Fund on your contributions. If it still looks good next month increase to 20% etc.. When the market is obviously in your favor start scaling in your TSP balance.

When in doubt there is no need to go all in or all out. Scaling in is the safest route. IMH

[galveston1]

You have 20 years left. If you’re willing to GO BIG, forget about the L-funds and get all in with stocks. And, at some point in the near future you will need to start contributing significantly more than 5%. With 20 years left before retirement, you can easily go from your current $20K TSP balance to well over $500K. There are going to be times that the markets will test you, but hang tough and stick with it. Since you’re wanting to learn more about investing, I recommend looking at TS Paul’s strategy over on the TSP Allocation site; http://www.tspallocation.com/

[n.shift]

thanks for your quick response. I will most certainly check out the link you sent me and all other links I can find pertaining to tsp investing. One more quick questions, When you say "get all in with stocks", you are referring to the C, S and I fund correct?

[Aitrus]

Welcome, n.shift! Lots of good info here. Don't be shy, the "wise people" on the forum would rather you asked and made money because of it rather than not. I'll second galveston's suggestion about reading TSPAllocation. Paul has a lot of good info on his site for those that have a long term outlook and don't have the savvy or desire to make a lot of market trades.

And yes, "all in" means the C, S or I funds. From there, it all depends on what kind of stock you want to invest in. Big US companies = C Fund. Middling and smallish US companies = S Fund. International companies (mostly in Europe, Japan and Canada) = I Fund.

[evilanne]

I recommend that you look at the seasonal investing thread that Aitrus updates (read the first few pages to get a better understanding and then the last few page to see where we are currently) viewtopic.php?f=14&t=12089

Set up Fantasy TSP account--you can see how other folks are investing and their rate of returns. If you want to invest in total market, it would be 50% C an 50% S Fund

Cramer's Mad Money on CNBC, Friday, 2 Dec, was excellent addressing investing based on age. https://www.thestreet.com/story/1391283 ... y-age.html He recommends starting with low cost S&P 500 index fund (C Fund) which has averaged 10% over the long term.

[Scarfinger]

I am in a similar place and time in my TSP. I would try and get your TSP contributions up to 10%. It really isn't that much difference in your check. It is all before taxes. I bumped mine from 5%, then 8%, then 9%, 10% and finally 11% this year. This is my 6th year in the TSP and I have 55K saved so far.

The easiest, no thinking involved, is to put it in the L2050. The L2050 is roughly 85% equities (S,C,I) and 15% bonds (F,G). And over time I believe it gradually decreases equities and increases bonds. *Personally, I would not put any in the "G" fund unless it is your monthly allocation that you will then plan on putting into equities at a specific time.

Basic strategy: Follow the seasonal strategy under "TSP Calculators"
Or: Follow someone with a proven record, like "TimboSlice" and do as he does.

At minimum: 1. save... and increase your saving 2. Get your money out of the "G" fund so you can start making more money 3. Follow a simple strategy, for example: Put your money in 15% "F" and 85% "S" and forget about it.
If you have no idea what you are doing, don't try and guess. You will buy high and sell low guaranteed. For example "rcozby" 32 allocations and 26 allocations the last 2 years averaging -13%. Sorry to throw you under the bus rcozby.

Once you get your "real" TSP set. Then try using this site to see how you do at managing imaginary money.

[n.shift]

I know the theory goes "bye low and sell high". With this in mind, now doesn't seem like a very good time to go "all in" on the c and s funds does it? Or as I mentioned in my original thread, do I need to try and stay clear of this thinking knowing at some point I need to get in the game? my gut tells me to wait until market slides then go "all in". However, I do understand this is a long term game and the market will constantly move up and down so there is no sense in waiting for it to slide. You can see how I am 2nd guessing myself. I will def read every link you guys directed me to. I'm also just leaning to keeping it all in the L2050 until I grab a better concept of how it all works. Mistake?

[Scarfinger]

I know the theory goes "bye low and sell high". With this in mind, now doesn't seem like a very good time to go "all in" on the c and s funds does it? Or as I mentioned in my original thread, do I need to try and stay clear of this thinking knowing at some point I need to get in the game? my gut tells me to wait until market slides then go "all in". However, I do understand this is a long term game and the market will constantly move up and down so there is no sense in waiting for it to slide. You can see how I am 2nd guessing myself. I will def read every link you guys directed me to. I'm also just leaning to keeping it all in the L2050 until I grab a better concept of how it all works. Mistake?

Yes. You are already overthinking it. Most the leaders are still in the "S" "C" or "I". A few have switched out to "G". If you do put it in and the market tanks...for gods sake just leave it alone. What will happen is that you will end up taking it out and then miss the bounce back up.

I have read studies that say even if you bought in at the market highs, you will be ok as long as you continue to save and invest. It is the old buy and hold strategy. *Remember your monthly contributions will be buying every month as the market goes down. And!!...Of course there will be many people telling...or selling you a better way of investing. The whole point is for you to start investing for retirement. Not to become the next Warren Buffett.

The L2050 made 4.25% more that the "G" fund. So its better than nothing

I don't know this TSPpaul guy. But I think his site is free. http://www.tspallocation.com/

From Nov 14th: "Bottom line(s) up front:

Thrift Savings Plan: there is nothing to indicate there will be a change in the economic conditions on which I base my TSP strategy over the next few months. So for now I am staying with my current allocation (85% C Fund, 15% I Fund). (Note that I have been planning to exit the I Fund for a number of months now and the Trump win makes that even more likely as I will discuss in the “Losers” section ). I will talk more below about what impacts President-elect Trump’s campaign promises could have on the US and global economy over the long term below"

[n.shift]

I changed it from L2050 to c 50% and s 50%. I Will probably stay here for at least all of 2017 while I research and learn learn learn. i'll be digging deep into all the info on this forum and links provided. plus anything else I can find pertaining to investments. I figured at 50%c and 50%s, only 1 of 4 things can happen. Lose it all which I highly doubt, gain a crap ton which I highly doubt, or remain slightly above or slightly below where I am at right now. The $20k mark! Only time will tell. GO BIG OR GO HOME!! That seasonal calculator cant actually be very accurate or safe can it? That just seems to simple to move your cash 6 times a year and have mid teen% return year after year

[ArrieS]

If you want to go big or go home that would be buy and hold. Seasonality and most other "systems" are attempts to reduce volatility and increase returns. But when you find a system you're interested in compare it to buy and hold. I'm willing to bet buy and hold beats it.

Case in point the seasonality system here talks about "...the rate of return averaged in excess of 16% over 20+ years". But it hasn't been in use that long. Rather they looked at the data from the past and made a system that fit the information. They used hindsight to create a system that worked well with past data. But it has in fact trailed behind the market since it has been in use.

To go big with higher returns but with increase volatility, 25% C and 75% S. This is the inverse of the actually stock market. The C fund which is the S&P is about 75% of the US market. With Republicans in control, investing inversely of the market in the S fund is a play on the fact tax reform and deregulation will have a lager impact on a company that is $1 billion dollars than Apple which is $588 billion. Smaller US business will benefit more.

Full discloser this is my recent allocation change. Again, look at when a system was first adopted for use and compare it to buy and hold.

[n.shift]

ArrieS do you not have a fantasy tsp? was actually wanting to see how you invested over the last year or so if you don't mind. And when people talk about "buy and hold" are they just talking about setting your tsp (like 50% c and 50% s) and leaving it alone for good? sorry for the stupid question!!

[sparky1]

ArrieS do you not have a fantasy tsp? was actually wanting to see how you invested over the last year or so if you don't mind. And when people talk about "buy and hold" are they just talking about setting your tsp (like 50% c and 50% s) and leaving it alone for good? sorry for the stupid question!!

Click on his FantasyTSP button and then scroll down to Allocation History

[Scarfinger]

ArrieS do you not have a fantasy tsp? was actually wanting to see how you invested over the last year or so if you don't mind. And when people talk about "buy and hold" are they just talking about setting your tsp (like 50% c and 50% s) and leaving it alone for good? sorry for the stupid question!!

Yep. Just make your monthly contributions the same.

[Scarfinger]

I'm willing to bet buy and hold beats it.

Full discloser this is my recent allocation change. Again, look at when a system was first adopted for use and compare it to buy and hold.

The "S" fund is up 14% YTD. Once you start trading when you don't have a clue... You will probably make less.

Buy and Hold with monthly deposits is your best bet. Use this site to learn more and then lose imaginary money trying to figure out the market.