This topic contains 2 replies, has 3 voices, and was last updated by Kristopher 3 years, 11 months ago.
November 12, 2015 at 4:51 pm #17558
I’m 26 years old and about to start my first “real” job in a couple of weeks. I will have a salary of $45,000 and will be working with the Federal Government so I’ll have access to the TSP. I’m going to put 10% of my income towards it and will receive a 5% match as well.
I’ve worked out my asset allocation after much research and I’d appreciate it if I could get some input on it. I don’t want to use the L Fund because I cannot stay with this job for more than 5 years – it’s a rule that I cannot get around. Once I leave the job, I plan on rolling it over into a Vanguard IRA with index funds that closely match those that are within the TSP. I plan on staying committed to these major asset classes throughout my life.
I plan on re-balancing once per year to match my stock:bond ratio and this ratio will change throughout my life depending on my age (see the second tab).
Here is a link to the excel spreadsheet: https://www.dropbox.com/s/j03b40gq33h45yu/Rebalancing%20Worksheet%202015.xlsx?dl=0
What do you think of the asset allocation I’ve worked out?
Thanks in advance.November 13, 2015 at 6:21 pm #17564
First, I applaud your diligence in investing in your future. Not better time than your youth.
Second, I highly recommend a more active strategy than yearly changes.
Having said that, my mistake over the years was a fixed strategy with yearly re-balancing. It wasn’t a bad strategy at 50% C, 50% S; and before that 70% C, 20%F and 10% G. I only wish I knew then, what I know now – a monthly strategy works far better if you’re actively involved. And your returns will be much greater than any fixed strategy.
Investigate it further. But again, your active involvement is a plus no matter what your choice.
www.TSPinvestor.comNovember 16, 2015 at 6:41 am #17601
I do agree that you need to revisit your investment and rebalance more than once a year. But don’t move money to move money as you and I will never be smart enough to time the short term movements of the stock market. Or even 10% corrections which recently happened.
The only thing you really should try to time are recessions. Invest your money mainly in the C and S fund for your long term growth. When it looks as if we are headed into a recession put more of your money into the F fund.
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