Refuge in G or Not?

[tcatlin]

With all the trade war and political chaos, I keep thinking that with a little over three years toward retirement that I should seek shelter and reduce risk in the G fund. There is bound to be a correction but the market just keeps going up. I've stayed put in 50% C and 50% S and have not done much in the way of market timing. During the last shutdown I moved to G and I would have been better off staying put. Obviously I don't want to lose my gains so close to retirement, but again, the market keeps going up. I have my finger on the trigger to move to G but not sure if it is the right move or not at this time.

Welcome any thoughts or analysis on this subject.

[Scarfinger]

With all the trade war and political chaos, I keep thinking that with a little over three years toward retirement that I should seek shelter and reduce risk in the G fund. There is bound to be a correction but the market just keeps going up. I've stayed put in 50% C and 50% S and have not done much in the way of market timing. During the last shutdown I moved to G and I would have been better off staying put. Obviously I don't want to lose my gains so close to retirement, but again, the market keeps going up. I have my finger on the trigger to move to G but not sure if it is the right move or not at this time.

Welcome any thoughts or analysis on this subject.

Most Monthly strategies go to "C" for October, and C/S for November

Most Daily strats that I looked at go to G/F for the 1st half of Oct then to C/S and stay C/S for most of November.

[Smoker317]

I am in a similar situation, I am eligible for retirement in about 30 months. I am C & S and am planning on jumping to G at the beginning of November or end of October and see what happens with the mid-terms. My crystal ball guess is if the dems take the house the market will initially freak and tank because come January it will be committee after committee to derail the white house. I don't know what is the right thing to do, but I know I can't absorb a 25% or more correction with less than three years to go coupled with the fact that we are nearing the end of this bull market.

[tcatlin]

That sounds like a reasonable take and plan Smoker317. I've been looking at the same window for a switch to G. The only thing I might add is I'm seeing rumblings of a possible shutdown September 30. This could affect the market much earlier but then again the market could just shrug and go higher. Seems this bull run is less affected by emotion, negative news and controversy than we have seen in the past, but I don't have any facts to back this observation.

Appreciate the input and thoughtful reply.

[ArrieS]

You only need to get rich once.

So the question is, do you have enough to retire now?

If so, why risk it? Seriously, why? Move much of it to G and leave some in stocks just for the exposure.

[tcatlin]

My TSP is not enough to retire in the classic sense of playing golf and sipping cocktails at the country club. I will have a second career. It's not bad but I am trying to make up for past mistakes and time like many people. It could be worse but I've made up for a lot by positioning myself aggressively in stock funds and staying put. So it's a question of how much hay I can make in three years vs losing a significant chunk in a market meltdown. I'm willing to take some risk but I don't want to be stupid about it. I'm not driven by greed but I want to make the best of the last few years. Going partial G and stocks might be a good compromise.

Thanks for taking the time to provide perspective.

[TSPBuilder]

With all the trade war and political chaos, I keep thinking that with a little over three years toward retirement that I should seek shelter and reduce risk in the G fund. There is bound to be a correction but the market just keeps going up. I've stayed put in 50% C and 50% S and have not done much in the way of market timing. During the last shutdown I moved to G and I would have been better off staying put. Obviously I don't want to lose my gains so close to retirement, but again, the market keeps going up. I have my finger on the trigger to move to G but not sure if it is the right move or not at this time.

Welcome any thoughts or analysis on this subject.

Hello tcatlin,

I have been pleasantly retired for just shy of 1 year (9/30/2017)now and here are my thoughts. The I Fund is currently experiencing what I call the optimal pattern for investing. On 9/7 we saw all the indexes bottom and rebound up. On the fourth day it broke through the first barrier of the 10-day moving average (SMA). For more days had it breaking the 50-day SMA. tomorrow's performance should match or break the past ceilings of 7/31 and 8/29. With all of this in mind, there has been on falter (negative day) in nine days of trading. Usually there is one or two of these on a run like this and on the third one it flips around and starts heading negative in its' cycle. There would be no shame in taking your money off the table tomorrow but all the signs say let it run until it falters two days in a row. That being said, past performance is no indicator... and, you are the one who ultimately will be taking responsibility for what happens in your account and possibly suffering for it. If this type of thinking hinders your judgement then this is not a game you should be playing. Emotion has to be taken out of this for you to be successful here. I took a really bad beat early this year in TSP and I might break even or to the plus side by the end of today. But that is okay. I have hedged my game by investing in a company outside of the TSP that leverages my returns to be twice the normal index and allows me to make money in the downturns or bear markets.

Some thoughts on your upcoming retirement. It can take up to 5 months before OPM finalizes your monthly pension amount. Until then you will get a supplemental amount. It was about 1.5 months before I got the first deposit and it was a little over $1000 to $1100. At five months I got the regular pension amount of around $2856. Fortunately, I am a saver and I have my 6 months of emergency funds to buffer me through the pension drought. I have a reduction in my pension for my ex of approximately of $1450. I haven't started drawing on my TSP yet but will be transferring three-quarters of it out to a traditional and Roth IRA. The last quarter will be my play money doled out monthly, starting in the next couple months.

Hopefully, you have been smarter than me and you are already contributing to your Roth through work and will have it up to about $100,000 before retirement. Apparently, you can't contribute to it after you retire. Since I didn't have this foresight, I'll have to do a Roth IRA Conversion for several years and before 59.5 years of age so that I can have federally tax free dollars to spend. Forgive me for the running off at the mouth. I hope it was relevant and maybe even helpful.

Good Luck in your many upcoming decisions!

[Bologna13]

If your investment strategy has been good through your working career, why change your investing strategy when you retire? The C&S have pulled around 8-9% though their history why not continue it through your history?

[tcatlin]

Bologna13: good question. I'm obviously conflicted on this subject. The other good question by ArrieS is "why risk it"? Both are valid and relevant questions and I'm on the fence between the two.

Why change strategy now? With three years left a significant correction or market downturn could in a short time wipe out a major part of my investment/savings. Additionally, if this happens there might not be enough time to recover.

Why risk it? Because any way I cut it I'm not going to have enough due to past mistakes and lack of attention. Ideally I'd like to make the most of the last three years to maximize what I have. If I stay in the G fund I risk nothing other than missing the significant returns I need to be able to "retire".

It's a double edged sword for sure. Even if I seek shelter in G, my strategy would be to wait for a downturn and then move back to stock fund. I can't see just leaving it in G for the next three years. Timing can backfire as I've experienced in the past but it's awfully tempting to think you can sell at a high point and buy back in after a correction. Buy low, sell high.

I almost pulled the trigger to go to G yesterday only to watch the market hit record highs so I'm not sure at all about either route to be honest.

[OkieTSPer]

Quite the challenge. Both ArrieS and Bologna13 bring up good points. I distinctly remember my 25% loss in 2008, but then the substantial gains the following years. With that in mind (and I'm now 2 years from retirement), my current risk tolerance is not as great as it was back then. At my 3 years from retirement mark, I began an incremented move out of C/S/F Funds (I don't invest in the I Fund) into the G Fund. This gave me the opportunity for some gain but also offered some security in the event of another 2008 (not to mention some more peace of mind). Now at the 2 year from the retirement mark, my mix is 60% G Fund, 40% C/S/F. On 1 Oct. I'll go to 63/37. I'll continue my incremented changes until I get to 73/27. This is just my approach based on the experiences I've had, my risk tolerance, and my expectations for retirement.

Best of luck.

[Octjan2]

Just my opinion but if you are 2-3 years from retirement wait for the next big downturn and then throw your money all in. You may miss out on 10-20% gains, but at least you won’t risk losing 20-30%. We are in the longest bull market in history so it has to come to a crashing halt at some point. If you have over 5 years left I think buy and hold prevails. I only wish I could follow my own advice.

[misfit]

Cozy in the G fund at the cob today. Seems like the safest bet at this point in the month. This last week of September will be stressless....Hopefully...

[misfit]

Does anyone know what type of financial environment effects the G fund. What is it based upon? Normally its up .01 or .02 daily. This past session its up .03? If it's up .03% daily, that doesn't seem too shabby. Is it possible that it could go above .03 in a day?

[tcatlin]

Misfit: according to TSP.gov

"The interest paid by the G Fund is set (and is recalculated every month) to the average rate of return of U.S. Treasury securities with 4 or more years to maturity."

In case anyone's curious I pulled the trigger to move to G today. Should have stuck with my intuition and moved to G last TH. Mondays down trend and news coverage scared me. Hoping for as much upside green today to close. I'll wait for the next big downturn and/or time for the political chaos and trade war to calm down, then get back into stock funds.

Thanks for the input everyone!

[tcatlin]

Misfit: I guess I didn't really answer your question about G.

According to Investopedia Treasury securities are affected by interest rates, inflation and economic growth.

https://www.investopedia.com/ask/answer ... yields.asp

https://www.investopedia.com/articles/03/122203.asp