Transfer all of G & F money to C & S

[UbuntuKaizen]

Has anyone calculated the financial benefit of a complete transfer of all monies in the G fund to the C fund, and the same transfer of all monies in the F fund to the S fund?
Note the C fund has grown from 10.00 to 110.00, while the G fund has grown from 10.00 to 20.00, and the S fund has grown from 10.00 to 101.00, with the F fund from 10.00 to 20.00, just in case this has not been noticed.

[Aitrus]

Not sure what you're referring to or what question you're asking. But I'll take my best guess.

There's no transaction fees, and the end dollar amount remains the same before and after a transfer. It's only the number of shares that changes.

If you have $1,000 of G Fund, and G Fund prices are $10 (meaning, 100 shares are owned), and all the G Fund shares are used to purchase C Fund shares that are at $100 a share, then 10 shares of C Fund are purchased. The investor's account balance remains at $1,000 regardless if that $1,000 is invested in G or C.

The benefit comes when share prices increase or decrease. The more shares are owned, the greater the increase or decrease. If $1,000 of C Fund at $100 a share are owned, and the C Fund goes up by 1% to $101 a share, then the total value of the account goes up by 1% to $1,010. Each share of C Fund went up by 1%, which is $1, and 10 shares are owned, so the account increases by $10.

However, if the $1,000 remains invested in the G Fund at $10 a share (meaning that 100 shares are owned) and the G Fund goes up by 0.01% (which is pretty normal), then each G Fund share goes from $10 to $10.001. Since 100 shares are owned, the account increases by $0.10, and the account is now worth $1,000.10.

If all the money is left in the G Fund for the entire career, then the benefit of the rise in the C Fund is never felt because the investor never owns any C Fund shares. That's the financial benefit: owning shares that increase in value over time.

[UbuntuKaizen]

I see... since the future is more like the past but not guaranteed, all the money in G & F needs to move today because of the potential future gain. Your presentation is also known as not seeing the Forest of results because of a focus on a Tree. I shared the past performance because some may not be aware of the performance difference, which is the point. G & F grows by pennies, C&S grows by Dollars. Holding money in G & F ensures the owner will underperform the potential growth of money in the C & S. This is not my made-up fact. An Ibbotson Chart shows this consistent performance Gap since 1926 https://www.newyorklifeinvestments.com/ ... dollar.pdf. The book Triumph of the Optimist data shows it was consistent since 1900 https://press.princeton.edu/books/hardc ... -optimists plus has continued for the 25 years since with the performance fact updated every year via Global Investment returns Yearbook https://www.ubs.com/global/en/investmen ... -2025.html ...Thanks for your attention and answer.

[Aitrus]

Yes...stocks go up in time more than a savings account (which is basically what the G Fund is) and bonds (the F Fund).

This we know, we don't doubt you or think you're making any of it up.

Let me rephrase my confusion: why did you feel the need to make a post that points out something that is already widely known? You used the allegory of not seeing the forest due to focusing on the trees. To those of us who are lumberjacks, your post just described what a tree looks like as if we had no idea. It's not insulting to us, but it's confusing.

In addition, it seems that English is not your native language. This is not a detriment or imperfection on your part, and perhaps my confusion is due to a minor misunderstanding on my part, or there may be a difference in culture that is not apparent to me. Perhaps your goal is simply to help new investors realize the difference in historical gains between the G & F vs the C & S Funds. If that is the case, then we thank you for your contribution to the conversation and welcome you to the forum.

As a side note: I find your name to be interesting. Continual improvement is a wonderful outlook to have in life, however, Linux is not an operating system I enjoy working with.

[UbuntuKaizen]

Thanks for having a forum where even I can bring Linux to the table. Yes, I dream of the day when there is Zero money in G & F because all the money is in C & S earning Dollars. Yes, I want that new investor to act on this future-return fact, and I feel compelled to share this insight because I don't assume everyone knows. When I look at the billions in G & F earning pennies, it seems to me that I noticed some lumberjack pennies amongst those billions, and all I can think of is Why! Yes, I believe a reader may reexamine why they did not move from G & F, which is required. G was the default; now the L's are in the future date effect. No, I don't assume everybody knows G & F are in the mix, which drags down L's total return every year.

[Scarfinger]

I believe the combined G/F is 1% for L2075 thru L2055. I feel the L funds get too conservative to fast for us Feds with pensions.

I have been recommending people use an Lfund at least 10 to 15 years past their retirement date. I personally am using one that is 20 years past my retirement date because my pension and SS will cover my expenses.

[Bubba]

Thanks for having a forum where even I can bring Linux to the table. Yes, I dream of the day when there is Zero money in G & F because all the money is in C & S earning Dollars. Yes, I want that new investor to act on this future-return fact, and I feel compelled to share this insight because I don't assume everyone knows. When I look at the billions in G & F earning pennies, it seems to me that I noticed some lumberjack pennies amongst those billions, and all I can think of is Why! Yes, I believe a reader may reexamine why they did not move from G & F, which is required. G was the default; now the L's are in the future date effect. No, I don't assume everybody knows G & F are in the mix, which drags down L's total return every year.

The people I spoke to that keep all their money in G claim it's "their money" and they don't want to lose any of it. They always quote the GFC and 2020 with massive drops. Some are in their early 40s, which is young enough to go through a bear market. In any case, I say that if that's how they feel, they should stick with what allows them to sleep at night.

[Wind]

I skimmed above, so please excuse me if I misunderstand the gist of the thread but,...

regarding stocks (C,S,I) vs cash (G fund); the stocks have on average earned quite a bit more than G but they've taken some pretty big dives. If you were near retirement age and your fund took a big dive, you may not recover previous savings amount during your lifetime (even assuming stock market returns to something of a historic 'normal'); might not even be able to retire; depending on particular conditions.

The L funds take the approach of heavy investment in stocks near the beginning of career in hopes of higher returns, but over the years, switching to higher percentages in G fund to safeguard that retirement future.

[Racknar]

Wind,

I would say you summed it up fairly well, at least as well as I understand it.