By Mike Miles
October 3rd, 2014 | TSP contribution
Q. My daughter is 20 and just entered the military, hopefully to make a career of it. She is contributing 10 percent to her traditional TSP and $25 per month to her Roth TSP. Her traditional TSP is fully invested in the G Fund (this was automatic and she didn’t know enough to change anything). Wouldn’t it be better for her to put the maximum amount she can afford into the Roth TSP before putting anything into the traditional? She will probably be making quite a bit more money when she retires than what she makes now. If not, what is your suggestion? If she keeps the traditional contribution, should she redistribute her fund percentages or just switch to one of the L funds that are managed for her? Read the rest of this entry »
September 11th, 2014 | Investing
Q. I am federal employee who transferred from CSRS to FERS in October 1998, and I have 37 years of federal service at age 66. Planning retirement within the next year, and I would like to ask your opinion about my TSP allocation which is G Fund at 35 percent, F Fund at 10 percent, C Fund at 35 percent, S Fund at 8 percent and I Fund at 12 percent. Is this an allocation to keep when I retire? Read the rest of this entry »
September 3rd, 2014 | L Fund
Q. I’m a 40-year old mailman with 17 years service. I plan on leaving the post office when I hit 52 (30 years service). I understand I need to leave my TSP alone until 55 without penalty. My house will be paid off before I’m 51. I plan to work part-time with less stress after 52. I have $91,000 in traditional TSP now ($15,000 in L2030), the rest in G fund. I just switched from 10 percent to 15 percent payroll withdrawal. Should I change my contribution to 100 percent going into L fund, or remain with my current 70/30 split in favor of the G fund? Read the rest of this entry »
July 31st, 2014 | Investing
Q. I retired nine months ago after 35 years of federal service. I am a CSRS annuitant. I am unsure of the best avenue to take regarding the opportunity to withdraw all or some of my TSP when I am 59-1/2 (I will be 56 in August). Like any investor, I am worried about the repeat of the 2008 stock market failure. I am considering withdrawing half of the balance and moving it into my money market account and converting the balance into a lifetime annuity. Read the rest of this entry »
July 25th, 2014 | TSP contribution
Q. I plan to retire under FERS in December 2020 at age 66. All my investment is in the G Fund, $350,000, as are my allocations at 100 percent. I was advised to move 60 percent to the C fund and 40 percent to the F fund ASAP with the same allocations. I consider this a risky and aggressive move considering my situation, the economy, and that the S&P is overdue for at least a 20 percent correction by the end of this year. What do the experts advise. Read the rest of this entry »
May 29th, 2014 | TSP withdrawal
Q. I have $115,000 in my TSP account. I’m retiring in August, and I plan on using the entire amount to get me through until age 60 when I draw my military retirement. Does it make sense to move my entire account into the G fund now? I’m going to draw the account down to nothing in 54 months, and I need to ensure I have the money during that time.
Currently I’m 70 percent S fund, 20 percent I fund and 10 percent F fund.
A. Yes. Your current allocation has lost 50 percent of its value twice during the past 15 years.
February 20th, 2014 | Uncategorized
Q. I work for the Defense Department. I have $75 biweekly going into the G Fund. I am in my early 30s and want to build my money. I don’t see it moving much in the G Fund, and I have been investing for four years. I can afford to invest $100 biweekly but don’t know what fund to put my money in for it to grow. My annual income is $38,780.
A. Given your circumstances, I suggest that you invest all of your Thrift Savings Plan money in the L 2050 Fund for the foreseeable future.
February 12th, 2014 | Uncategorized
Q. I saw you use the term risk efficiency in a recent response, and it made me curious. I have a nice little amount in the Thrift Savings Plan now. I don’t think I will be needing it in the future, except to hand down to future heirs, and so have tried to maintain a 70 percent stocks (35 percent C, 15 percent S and 20 percent I), 15 percent F, 15 percent G ratio. I read in a financial magazine (sometime around 2009) that a 70/30 ratio of stocks to bonds and/or cash reduced the risk considerably over a 100 percent stock portfolio, and didn’t reduce returns significantly. Do you agree, or do you have some other thoughts on what is risk-efficient for long-term growth?
A. Risk efficiency is a measure of how close an investment portfolio lies to the “Efficient Frontier” — the set of portfolios that mix assets together in ways that produce the maximum expected rate of return for the level of risk they produce. I can’t tell you how risk-efficient your asset allocation model is, but I’d guess it’s pretty risk efficient. Note that this doesn’t mean that it’s risk-appropriate. The correct asset allocation will be both.
February 6th, 2014 | Uncategorized
Q. I am 47, have been investing for seven years, have reached maximum contributions at a total of $115,328.22 and will eventually retire at 63.
Recently, there is talk in the stock market of a global sell-off. I have had all of my investments in the S Fund and doing quite well. As of Jan. 23, I’ve shifted my contribution of 100 percent from S to G. Was this a financially dumb move?
A. Not if you’ve guessed right. Only time will tell. For what it’s worth, if we’re talking about your entire portfolio here, you should be invested in all five funds, all the time.
January 29th, 2014 | Uncategorized
Q. It seems everywhere a person reads, the “expert” advice is to get out of bonds. It’s likely that interest rates will climb soon (they certainly will not go lower), the world is awash in debt etc. Your advice is to substitute a portion of other funds in place of F.
Given the predicted bond climate, why not reduce F Fund allocation to near zero? Is there some reason I’m missing for maintaining an allocation in F above low single digit percentages or perhaps no F fund allocation at all? In other words, if the F Fund is about to incur losses, why not move it all out for the short term?
A. As I have said, and you confirm, I have no objection to substituting G Fund for F Fund in the current interest rate environment. The reason to keep some allocation to bonds is for their ability to hedge stock risk. If the stock market loses 50 percent of its value again (for the third time since 2000), that F Fund exposure will look pretty smart.