Browsing: L Fund

Q. My understanding is that the TSP lifecycle funds do not change allocation percentages based on projected market trends and changes in risk. For example, a lifecycle fund would not increase the percent in G funds if they thought a bear market was nearing. So, if Forbes is right and a bear market looms, what is the best way to minimize loss in one’s TSP lifecycle fund? Should we drop back from lifetime expectancy L fund selection to actual expected retirement timeframe for our L fund? When is the recommended time to do this? A. Market timing is pretty simple,…

Q. I understand how and why the L funds such as the 2020, 2030 and 2040 adjust themselves as you get closer the target date. I don’t understand why the L Income Fund adjusts itself, since isn’t it the consistency of the Income Fund that retirees are after? A. The stated goal of the L Income Fund is “to achieve a low level of growth with a high emphasis on preservation of assets.” I can’t tell you why they decided to use this method to achieve this goal, since it isn’t necessary, but that’s the way it is. Remember that…

Q. I am 47 years old with 23 years in federal law enforcement. I will be eligible for retirement in two years at 49 years old, in the year I turn 50, so I will be eligible to draw from my TSP without penalty immediately. I have over $500,000 in my TSP. My decision to draw will be based on possible employment opportunities and income post-retirement. But if possible, I would like to minimize my impact on the balance. I know you have previously advised placing money in the L Fund closest to your life expectancy if you are unsure…

Q. I am 52 years old and I am currently a government employee. I have approximately $38,000 in my TPS, all in the G Fund and I plan to retire in 10 years. I also have money coming in from an active-duty military retirement. I was thinking of transferring the entire balance to the L2030 to try and maximize growth over time. Is this a good decision? A. It’s impossible to say from the information you’ve provided here. If you don’t know what to do, I think you allocate your TSP money into the L Fund that most closely corresponds to your…

Q. I have often read you stating to put your TSP in the L Fund most closely matching your expected life expectancy if you are not able to analyze the market (which I am not able nor willing to hire someone to do that). I am a former FERS employee, retired at age 56. I am now 59 and I only have $120,000 in my TSP and hope to wait until age 70 (or just leave it alone for my sons), if possible. I wondered if the L Fund most matching your life expectancy is suggested for a current employee…

Q. I am wondering how Lifecycle Funds value are determined. For instance, the L2050 Fund is less expensive than the L2020 Fund and the L2050 is the more aggressive fund meaning it has a higher percentage of C, I and S. I don’t understand how this works. Additionally, I tabulated each of the L funds by taking the percent allocation multiplied by the cost of the fund and it is less expensive for me to allocate the same percentages of any of the L funds (outside of L2050) directly versus the subsequent L fund. For example, as of this [April…

Q. Do you see any advantage in periodically transferring funds from my 403b to my TSP? The 403b is invested in a life-cycle fund from Vanguard, so the fees I assume are pretty low. The only advantages I see are I currently have access to funds if needs in my TSP as I was a law enforcement officer and have provision to access this as I retired with over 20 years in federal law enforcement. But I don’t plan to withdraw for a long time (I’m 53) and perhaps the TSP fees are even lower then Vanguards? I assume transfers are…

Q. What is your opinion of the so called “bucket” investment strategy for retirement in the TSP, with a “now,” “soon” and “later” allocation? The now being a three-year time frame in the G Fund for a safe flow of income, the soon 3-5 year in the L-Income that would be less conservative and the later maybe investing in the Lifecycle Fund corresponding to life expectancy for more aggressive growth? I realize the allocations would have to be updated regularly. With such a strategy, would it be best to make adjustments monthly, quarterly or annually?

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