why not L funds???

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lakerno33
Posts: 5
Joined: Thu Jan 03, 2013 8:59 pm

why not L funds???

Post by lakerno33 »

I've noticed that nobody use the L funds? My logic was that the l2050 was only about 10.23 a share when completed my IFT. I figured it would eventually be worth at least 19. Again I'm new and open to criticism. Thanks for all the help.

Jerome
Posts: 37
Joined: Fri Sep 14, 2012 6:42 pm

Re: why not L funds???

Post by Jerome »

The L funds are conservative, putting one in cash and bonds earlier than many want. If we ever have hyper-inflation again, cash and bonds will be more risky than stocks.

Most people here appear to be trying to time the stock market, which is extremely difficult because emotions can cause one to deviate from a timing system. I stay mostly 100% in stocks all the time even though I am nearer retirement.

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Navig8tor
Posts: 562
Joined: Mon Jul 19, 2010 10:48 am

Re: why not L funds???

Post by Navig8tor »

The L-Funds are conservative???

The 2050 is 88.5% equities. The 2040 is 78.5% equities. The 2030 is 68.5% equities. From there on down I'd say the remaining funds are moderate to very conservative; however, I wouldn't call the the 2030, 2040, or 2050 "conservative."

Why don't most of us use the L-funds...I'd say because the allocations are all cock-eyed and they are mainly used by buy-and-hold investors who don't want to spend their time trying to time the market the rest of us do. We want to get in on an uptrend and get out when the market is in decline. The less amount amount of time you spend exposed in equities, the less chance you have to get burned.

If you flop your wad into an L-Fund and just leave it there you're just as likely to lose as you are to win. However, if you don't know what you're doing with market timing you'll probably come out with a lower return that you would have gotten had you just sat in an L-Fund (or other equities funds) and just rode it out.

You just have to manage YOUR portfolio in a manner that makes YOU sleep at night!!
Navig8tor
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Pocono13
Posts: 541
Joined: Mon Dec 22, 2008 4:40 pm

Re: why not L funds???

Post by Pocono13 »

Well said Navig8tor.

lakerno33
Posts: 5
Joined: Thu Jan 03, 2013 8:59 pm

Re: why not L funds???

Post by lakerno33 »

Thanks a lot navigator.

tsp4me
Posts: 7
Joined: Mon Feb 09, 2009 9:00 am

Re: why not L funds???

Post by tsp4me »

OK I admit it - I can't time the market! But is appears I'm not alone.
Less than 10%, only 112 people out of the 1320 members managed to outperform the L2050, 155 beat the L2040, and 203 the L2030 in 2012.
2011 we did a better seeing 492 people out of 720 members beat the L2050, 421 beat the L2040, and only 350 beat L2030.
2010 the L2050 wasn't available, but only 84 members beat the L2040, and 78 managed to beat the L2030.
The evidence is stacked against me, so I'm 50 percent in the L2030 permanently on my real TSP. The other 50% I let that part of my brain that believes that I can, despite the evidence, try to time the market - so far my brain is getting stomped and I really should go 100% into the L2030 but I'm still not ready to admit defeat :-)

mikerogs
Posts: 4
Joined: Tue Jan 01, 2013 12:13 pm

My "L" fund experience

Post by mikerogs »

Back in 2006-2008, I kept all of my TSP balance and contributions in the L2030 fund. In Sept 2008, I began to get concerned with the pending financial collapse and attempted to get more conservative and split 50/50 L2020 and L2030 and thought the mix of the L and G would help offset losses in the C, S and I. it didn't work out that way and by the end of 2008 I was down about $60k on paper with both contributions and existing balance. That was the second time I got stung (luckily it could have been much worse). By mid 2010 most of the balance was recoved and I am about even from 2008 when you factor in returns and contributions from 2009 to 2012. The biggest lesson learned I got from all this is you really have to be careful and outside of the "G" and maybe the 'F" fund, with equities comes risk.

In using the TSP (which is a great tool), factor in your FERS, IRS contribution limits of $17500/year, the goal of $0 debt come retirement, the fact that the Fed Gov matches 5% and the Fed gov wants people to spend, fears inflation and has a bigger hand in the financial markets more than ever. I have beome increasingly conservative with my TSP investments (L income) which gives a wealth accumulation with exposure to some equisities to help with the return but not enough to devastate your TSP in a downturn. I also invest in mutual funds such as T Rowe Price Capital Appreciation and Spectrum Income to supplement the TSP. This may not hedge inflation or may be way too conservative but I am as much into capital preservation moreso than appreciation.

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snaffu
Posts: 380
Joined: Wed Jan 23, 2008 2:09 pm

Re: why not L funds???

Post by snaffu »

tsp4me wrote:OK I admit it - I can't time the market! But is appears I'm not alone.
Less than 10%, only 112 people out of the 1320 members managed to outperform the L2050, 155 beat the L2040, and 203 the L2030 in 2012.
2011 we did a better seeing 492 people out of 720 members beat the L2050, 421 beat the L2040, and only 350 beat L2030.
2010 the L2050 wasn't available, but only 84 members beat the L2040, and 78 managed to beat the L2030.
The evidence is stacked against me, so I'm 50 percent in the L2030 permanently on my real TSP. The other 50% I let that part of my brain that believes that I can, despite the evidence, try to time the market - so far my brain is getting stomped and I really should go 100% into the L2030 but I'm still not ready to admit defeat :-)

There's the reason to follow the long-term leaderboard.. Stockmarket projection isn't for everyone. If you are not getting returns better than the L funds, then they are your best bet. IMHO, L funds are deposit and forget.. They are of no use in trading.

I think a lot of folks think the L funds are different that the core funds.. They are not. They're made up from the core funds. The only difference is the % of each vs. Time.

This is just an example, and not the real ratio, but lets say that:
2050 is made up of 20% I, 20% S, 20% C, 20% F and 20% G.
2040 is made up of 15% I, 15% S, 15% C, 15% F and 40% G.
2030 is made up of 10% I, 10% S, 10% C, 10% F and 60% G.
Notice that as time goes on, $$ are shifted from more risky funds to safer funds to preserve capital as you reach your target retirement date.

L funds are not a safe haven, If the market is tanking, then so too are the L funds, just not as fast. the reverse is true, if the market is ralling, the so too are the L funds, just not as fast.

Remember, we're talking about real money and YOUR RETIREMENT $$$, not gambling.

And most import - EDUCATION.. There are several recources out there to improve your understanding of market analysis. By all means, If you have a question, Dont keep it to yourself, ASK.

I keep a daily log slightly different that FTSP, Here is a screenshot of a table that may show relation to the core funds better..
You do not have the required permissions to view the files attached to this post.
Just because I give you advice, It doesn't mean I know more than you, It just means I've done more stupid stuff.


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Fund Prices2024-03-28

FundPriceDayYTD
G $18.15 0.05% 1.05%
F $19.08 -0.06% -0.74%
C $82.21 0.11% 10.55%
S $82.43 0.30% 6.92%
I $42.57 -0.24% 5.95%
L2065 $16.38 0.02% 8.37%
L2060 $16.39 0.02% 8.38%
L2055 $16.39 0.02% 8.38%
L2050 $32.73 0.01% 6.95%
L2045 $14.91 0.02% 6.58%
L2040 $54.38 0.02% 6.22%
L2035 $14.34 0.02% 5.79%
L2030 $47.67 0.02% 5.38%
L2025 $13.15 0.03% 3.43%
Linc $25.61 0.03% 2.82%

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