With the new year, change has come to the Thrift Savings Plan’s lifestyle funds, or L funds. One fund, L 2010, has been retired. Another, L 2050, is set to become available at the end of this month. The L funds are a set of five investment funds that are professionally designed with different asset allocations of TSP’s five underlying funds — the C, S, I, F and G funds. The allocations are automatically adjusted in relation to how soon an investor will retire. TSP recommends that you select the L Fund with a maturity date that most closely matches…
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By now, I’ll bet that most Thrift Savings Plan investors have figured out that actively trading TSP funds, either for short-term profits or to avoid short-term losses, is an unreliable way to fund their retirement standard of living. But if speculating on short-term moves in share prices is the wrong way to try to build wealth, then what is the right way? Buy and hold? There is no shortage of advocates for the proposition that simply buying quality investments and then holding them indefinitely will lead to superior investment results. I’m sorry to say it’s not that easy. For starters, the…
Successful retirement investing depends more on avoiding serious mistakes than it does on realizing exceptional gains. Cash flows from your portfolio when investment values are depressed can cause damage that won’t be repaired later by better returns. If you withdraw $10,000 from a portfolio when it is worth $200,000, you’re withdrawal represents 5 percent of your portfolio. If, alternately, you withdraw that same $10,000 from your portfolio after its value has fallen to $100,000, you’ve now withdrawn 10 percent of your portfolio’s total value. A withdrawal rate of 5 percent might be sustainable over 20 or 30 years, but a…