L funds and the 'lost decade'


Q: I just read the “lost decade” article in Money Matters and I am wondering why you did not mention the L Funds. I have all my Thrift Savings Plan funds allocated to L Funds as recommended to me since I  am in my 10-year window of retirement. Is that a mistake? Should I also diversify into the other five individual  funds?

A: I’m not a fan of the L Funds, but I can’t say that using them is a mistake. The problem I have with them is that it’s difficult to know whether the robotic allocation shifts they make are appropriate for you when they are made. What do the L Funds know about your circumstances and goals?

The L Funds will help you to avoid some of the mistakes that many TSP investors make, but that doesn’t make them the best solution. Your interests are best served by selecting and implementing the appropriate asset allocation in your account on a regular basis — at least annually and no more frequently than quarterly.


About Author

Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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