TSP allocation Part II

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Q. I have between 10 and 15 years to work until retirement (I am 52 yrs old). Right now, my contribution allocation is:

S: 25 percent

C: 25 percent

L: 20 percent

G: 30 percent

The distribution is more diversified. What do you think? I don’t know what I am doing; therefore, I am just guessing.

A. Your allocation is basically: 50 percent stocks, 20 percent bonds and 30 percent cash. This would generally be considered a moderately conservative allocation. Whether, or not, it’s right for you is impossible to say without more information and analysis, but it doesn’t appear to be grossly inefficient to me.

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  1. You are leaving a tremendous amount of money on the table with that allocation in this economic environment. The F Fund portion of your L Fund will be negative for years to come as interest rates rise, and the G Fund will barely keep up with inflation. We are in the midst of a bull market and you should be 100% in stocks. Take a look at http://www.fedtrader.com and http://www.tspallocation.com to get some guidance.

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