Understanding TSP
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Understanding TSP
I'm a newb at this TSP stuff but I have a question I'm hoping someone can answer for me. Do share prices matter to TSP users? As in do I still need to keep in mind the strategy "buy low, sell high"? If I'm understanding this correctly I believe the share price does not really pertain to TSP. Correct me if I'm wrong, but isn't it to where you take your current total In that fund (for example $10,000 in the C fund) and times it by the percentage it goes up/down? So today it has gone up 0.15% so that would make my total reflect $10,015. I know this math is true, but why if at all does share prices affect this? Thanks ahead of time for any insight on this.
- Newb
- Newb
Re: Understanding TSP
You own shares of the TSP. Your balance is computed by multiplying how many shares you own by the share price.
If you own 100 shares of C fund and the C fund price is $15.06/share, then:
100 shares * 15.06/share = $1506.
It is easier to track gains by percentages, though, because the share price of the TSP fund does not match the share price of the underlying index.
For instance, notice that the DWCPF price is about $1257, but the S fund price is $44.97. But, these two funds are invested in almost exactly the same companies at the same ratios. So when DWCPF goes up 0.55%, the S fund will go up right about the same. There will be a difference of 0.01% or 0.02% sometimes, because they are not 100% identical, but very close.
The I fund does not match EFA very well. The C, S, and F funds are much closer to their underlying indexes. But with the I fund, you do not know how much the fund will increase until the TSP releases the new share price.
If you own 100 shares of C fund and the C fund price is $15.06/share, then:
100 shares * 15.06/share = $1506.
It is easier to track gains by percentages, though, because the share price of the TSP fund does not match the share price of the underlying index.
For instance, notice that the DWCPF price is about $1257, but the S fund price is $44.97. But, these two funds are invested in almost exactly the same companies at the same ratios. So when DWCPF goes up 0.55%, the S fund will go up right about the same. There will be a difference of 0.01% or 0.02% sometimes, because they are not 100% identical, but very close.
The I fund does not match EFA very well. The C, S, and F funds are much closer to their underlying indexes. But with the I fund, you do not know how much the fund will increase until the TSP releases the new share price.
Owner/creator of TSPcalc.com - "Know your numbers"
- Snapdragon
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Re: Understanding TSP
And you still want to buy low and sell high. I watch S&P 500 and DWCPF to help me make decisions on this. When I buy, I also write down the actual fund price from the bottom of the Fedsmith email so I know exactly where I stand.
Re: Understanding TSP
So let's say I buy into C fund at $30 a share and the current share price is $40 a share.... an IFT from C to G is selling my C shares? And am I profiting from the original $30 a share I paid in the begining?
Following Stategy: http://tspcalc.com/seasonal.php?ID=16517
Re: Understanding TSP
Thirty3 wrote:So let's say I buy into C fund at $30 a share and the current share price is $40 a share.... an IFT from C to G is selling my C shares? And am I profiting from the original $30 a share I paid in the begining?
Yes. You made $10/share.
Owner/creator of TSPcalc.com - "Know your numbers"
Re: Understanding TSP
So if I buy C fund every pay check at different share prices for a year, when I go to G fund (sell C) the TSP has memory of every individual share price I paid throughout the year?
Following Stategy: http://tspcalc.com/seasonal.php?ID=16517
Re: Understanding TSP
Honestly I really don't understand "buying and selling" shares in TSP. Anytime I put $ from C,S,I,F into G I basically sold them? So the sell price would be the current share price right? What about the prices I originally paid for the shares? I'm confused and could use some schooling on this.
Following Stategy: http://tspcalc.com/seasonal.php?ID=16517
Re: Understanding TSP
Thirty3 wrote:Honestly I really don't understand "buying and selling" shares in TSP. Anytime I put $ from C,S,I,F into G I basically sold them? So the sell price would be the current share price right? What about the prices I originally paid for the shares? I'm confused and could use some schooling on this.
An IFT is a sale and a buy all in one transaction.
If you are in C and IFT to G, then you sell C fund shares and buy G fund shares.
The TSP does keep track of your share prices throughout the year, but only for recordkeeping. All that matters is how many shares you own.
Say you buy 10 shares of C fund at $10 each. TSP doesn't care about the value. They track that you own 10 shares of C fund. The valuation calculation is done at the end whenever you look at your account balance.
Say your 10 shares of C fund are now worth $20 a share. The valuation is $200. So if you IFT from C to G, then they will sell all 10 of your C fund shares and get $200. Then they immediately buy you G fund shares at whatever the G fund price is. If the G fund price is $10 that day, then they buy you 20 shares of G fund.
Now you own 20 shares of G fund. That doesn't change until your next IFT, even if the price per share changes. So the value of your account at any point in time is calculated by how many shares you own times the current share price.
Owner/creator of TSPcalc.com - "Know your numbers"
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Re: Understanding TSP
Which is why it's easier to track percentages-- you cut out the middleman and don't need to convert your total account balance to a particular (or multiple, depending on if you've spread your account out through multiple funds) share price. If you buy the C Fund at $20/share and it goes up to $20.20/share, it's gone up 1%; it doesn't matter if you have $100 or $1 million, take your total and add 1%.
With respect to the Index fund and the TSP fund that matches it, just think of a group of people managing some big important fund (like the DWCPF) and then a smaller, government-hired group that looks at what the bigger group does and tries to make the same investment moves that the bigger group does... The changes in share price (and the following percentage changes) are CLOSE, but not exact... PLUS, now you can just deal in percentages because the Index fund could cost $97/share while the TSP fund only costs $28; no need to do complex math to figure out what $1 more in Index share price translates to TSP fund, if Index goes up 1%, TSP should do just about the same...
With respect to the Index fund and the TSP fund that matches it, just think of a group of people managing some big important fund (like the DWCPF) and then a smaller, government-hired group that looks at what the bigger group does and tries to make the same investment moves that the bigger group does... The changes in share price (and the following percentage changes) are CLOSE, but not exact... PLUS, now you can just deal in percentages because the Index fund could cost $97/share while the TSP fund only costs $28; no need to do complex math to figure out what $1 more in Index share price translates to TSP fund, if Index goes up 1%, TSP should do just about the same...
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Re: Understanding TSP
This has helped a lot. Thanks to everyone for the information on this subject. Makes a lot more sense now.
Fund Prices2024-03-27
Fund | Price | Day | YTD |
G | $18.14 | 0.01% | 1.00% |
F | $19.09 | 0.26% | -0.68% |
C | $82.11 | 0.87% | 10.42% |
S | $82.19 | 1.48% | 6.61% |
I | $42.68 | 0.56% | 6.21% |
L2065 | $16.38 | 0.84% | 8.36% |
L2060 | $16.38 | 0.84% | 8.36% |
L2055 | $16.39 | 0.84% | 8.36% |
L2050 | $32.73 | 0.71% | 6.94% |
L2045 | $14.91 | 0.67% | 6.56% |
L2040 | $54.37 | 0.63% | 6.20% |
L2035 | $14.34 | 0.58% | 5.77% |
L2030 | $47.66 | 0.53% | 5.35% |
L2025 | $13.14 | 0.31% | 3.40% |
Linc | $25.60 | 0.24% | 2.79% |