Help Moving from S to C fund.

THE THRIFT SAVINGS PLAN ALLOCATION GUIDE Forums Message Board Help Moving from S to C fund.

This topic contains 15 replies, has 5 voices, and was last updated by  Jeff 3 years, 3 months ago.

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  • #17560

    rolfeskj
    Participant

    I currently have a 20 year time frame until retirement and I am currently in 75% – S and 25% – I. Per you advice it is getting time to move from the S fund to the C fund as we move into a new business cycle.

    At this time I am down a lot of money in the S fund due to the correction, as of yesterday the S fund is down about 10% from its high before the correction (High – $39.33, Current – $35.58). But the C fund seems to have already fully rebounded from the correction if only one or two percent off (High – 28.40, Current – $27.50).

    I feel like if I move any of my money from the S to the C fund right now I am selling low in the S fund and buying high in the C fund.

    1. Should I move from S to C now (40% or so) and just take the loss, about $13,500 (8% of my total TSP investment fund) for me?

    2. Should I just wait for the S fund to get back up to $38-$39 per share then move form S to C (40% or so)?

    3. Will the S fund get back up to $38-$39 per share price point in the short term (6 months) with the looming rate hike?

    Thanks for any help or thoughts.

    #17563

    NokieVA
    Participant

    much of the guesswork in which fund to invest is very subjective … having said that,

    my model/formula recommends about 50% in S .. the rest in C, F and G. It has recommended between 35% and 55% for the previous 4 months in S. So it is currently staying strong in S.

    Cheers,
    Jeff

    www.TSPinvestor.com

    #17667

    Kristopher

    Any thoughts on this question? Since then I have moved some money, 10%, from my I to C fund. So now I am 10%-C, 75%-S, and 15%-I. I am fairly happy where I am but would like to move about 30% from S to C at some point. Any thoughts on when or how to do this with S still be doing down and C being recovered? Thanks.

    #17668

    Anne

    If you look at 52 week range for S&P 500 1,867.01 – 2,134.72 with current price about $2,080 vs the DWCPF 52 week 963.53 – 1,141.58 and price about $1,040, I think S has more opportunity to increase than C. This is supports above statement in first post: “I feel like if I move any of my money from the S to the C fund right now I am selling low in the S fund and buying high in the C fund.”

    I’m not good at moving large amounts between funds, I recently changed by contributions to 10 C, 70 S & 20 I. I’m actually considering shifting some amount from C to S in early December but I currently have more in C than S.

    #17828

    Anne
    Participant

    Since TS Paul said he was going to start transitioning from the TSP S Fund to the C Fund sometime after Christmas through the middle of next year, does anybody have any wisdom on the best way to do this, given the limitations on interfund transfers within TSP?

    Although trying to time them market is almost impossible, especially when any transfer decision must be made before 12:00 EST to take effect that evening; I can’t help but try to optimize the timing of any transfers however futile my attempts may be. Since the S & C funds pretty much mirror each other, not sure that it makes much difference but I still think there may be more growth opportunity in S than C currently. I’m also considering shifting some portion to safer funds when either fund nears previous highs but not sure exactly how much or what that point will be.

    Hope everyone has a Very Merry Christmas and a prosperous New Year!

    #17829

    Jesse

    It is best to stick with 15 I and 85 S (currently) to slowly transitioning to the C fund. By the middle of next year, all 85 of it should be in the C. It would not be wise to go into a safer fund. I agree that we should follow TS Paul and his date supports his thesis.

    #17830

    Anne
    Participant

    Jesse,

    One thing I did learn this year is that sometimes holding cash (or in the case of TSP – primarily G or even F) can be advantageous in taking advantage of certain market conditions. Typical wisdom in the stock market is to buy low & sell high. Buying the dip during a correction can increase your overall rate of return.

    Despite a few missteps in some of my TSP transactions this past year, overall my return YTD and annual performance is positive, so I believe my strategy is good given my situation. In the long run your position may serve you well, but being much closer to retirement than you–a little more caution does make sense for me.

    Early this month I added an MLP closed end fund (which appears to have bottomed out along with falling oil prices) to my Roth outside of TSP and it has increased over 20% in less than 3 weeks. In reviewing my accounts outside of TSP, I also learned that I need to have a better exit strategy, i.e. plan to sell some stocks/funds to either lock in gains and/or limit losses based on market conditions. E.g. when a sector such as energy is falling, selling at a gain and waiting for the market to settle to buy at a lower price (if good for the portfolio) or to buy another stock/fund with more potential is a much better strategy than a typical buy & hold strategy. Although I didn’t lose any money that I had invested, I could have gained more by better managing my portfolio outside of TSP. Continuing to learn through it all.

    Still wondering if anyone has any good ideas on the best way of transitioning between funds within the TSP?

    #17845

    Kristopher

    Anne,

    From looking at the TSP data, hind site is always 20/20 but I think this shift from S to C should have happened over a year ago.

    The S fund has been flat since mid 2014 (7/1/2014 $36.08, 12/29/15 $35.80).

    While the C fund has out preformed the S fund during the same 18 months (7/1/2014 $25.76, 12/29/15 $28.02).

    If we all had switched from the S to C fund 18 months ago (7/1/2014) we would be up over 8% but I had 85% in the S fund for the past 18 months so I lost money -1%.

    Now my only real worry is how long until the next recession. I don’t want to ride the C or S fund all the way to the bottom like I did in 2008.

    From what I can tell the S/C fund were fairly flat or in the Prosperity/Growth phase from about 2/2007 to 6/2008, about 16 months before the crash.

    From the stock prices alone it seems like we have been in the Prosperity/Growth phase for at least 12 months now. Stocks are overall flat, the C fund is out preforming the S fund and the interest rate hike did just go up but many people argue it should have happened a year ago.

    TS Paul stated the this phase, Prosperity/Growth, should last around 4 years. But the growth phase per TS Paul averaged 15 months. I think we all can agree it has instead lasted many years.

    So any one out there with a crystal ball do we only have 6-12 months left in the Prosperity/Growth phase or are we years away from seeing another recession / bear market?

    #17846

    Kristopher

    In addition looking at the S&P GSPC you will notice a pattern:

    http://finance.yahoo.com/echarts?s=%5EGSPC+Interactive#symbol=%5EGSPC;range=my

    Any thoughts? Are we at the top heading down? Recessions on average happen every 6.1 years since the great depression, its been 7 years since our last one.

    #17849

    Anne
    Participant

    I think you are right Kristopher, but I think when you put it in terms of the stages, I think we may be even further along in the cycle…closer to the Late (Slowdown) Phase. It looks like over the last 3 to 5 years, C has out performed the S Fund (although you can find different periods to support the opposite)

    C Fund S Fund
    12-31-2010 15.2084 21.2445
    Increase 82.95% 67.16%
    02-17-2012 16.8621 23.2391
    Increase 65.01% 52.81%
    12-30-2015 27.8239 35.5126

    Comparing S&P 500 and INDEXDJX:DWCPF

    12-31-2010 to 12-30-2015
    S&P 500 64.18% vs DWCPF 53.17% or W4500 54.45%
    https://www.google.com/finance?chdnp=0&chdd=1&chds=1&chdv=0&chvs=maximized&chdeh=0&chfdeh=0&chdet=1451540997904&chddm=497514&chls=IntervalBasedLine&cmpto=INDEXNASDAQ:W4500;INDEXDJX:DWCPF&cmptdms=0;0&q=INDEXSP:.INX&ntsp=0&ei=78GEVpD9GpbVjAHQvouoAw

    02-17-2012 to 12-30-2015
    S&P 500 53.67% vs DWCPF 44.00%
    https://www.google.com/finance?chdnp=0&chdd=1&chds=1&chdv=0&chvs=maximized&chdeh=0&chfdeh=0&chdet=1451541223564&chddm=385917&chls=IntervalBasedLine&cmpto=INDEXDJX:DWCPF&cmptdms=0&q=INDEXSP:.INX&ntsp=0&ei=y8KEVpCeEIG82Abz4Jo4

    If you look at US Real GDP Growth Rate, it looks like we have peaked 3 times slightly below 3% since 2008/9 http://www.multpl.com/us-real-gdp-growth-rate/table/by-year or GDP Annual Growth Rate slightly different figures http://www.tradingeconomics.com/united-states/gdp-growth-annual – select the various time periods.

    I hope I am wrong, but I believe our economic recovery is struggling due to some underlying fundamental issues plus not fixing the problems that caused the last recession. Unfortunately, I don’t have any crystal ball. I do think that the current administration will do everything they can to avoid a recession in an election year, but I think there are some politicians that would not mind the economy tanking if it gave them some political advantage. We do live in interesting times:)

    #17851

    jesse

    I suggest slowly transitioning from the S to C fund over the next 6 months. The data supports it. There is no reasons to do anything else.

    #17863

    12squared
    Participant

    The relative values of S and C funds have varied more than 15% over the past two years. S fund is currently historically low priced compared to the C fund. Except for brief spikes in Oct 2011 and Sept 2012, the S:C price ratio has been above 127% since early 2010.

    I agree with rolfeskj that going from S to C now “would essentially be selling low in the S fund and buying high in the C fund.” Having recently converted all my C fund to S, I don’t plan to move back to C until the S:C ratio is at least 5 percentage points higher. With retirement ~20 years away, I’m not too concerned about the price of S over the next year, as I believe the economic conditions will continue to be favorable overall.

    #17895

    Anne
    Participant

    I thought so too, hoping it would come back end of December, but S continues to go down more on a daily basis. This year that equates to a loss 1.3% greater for S than C.
    S&P DWCPF
    Today down -1.09% -1.41%
    Close 1,922.03 938.14
    52 wk High 2,134.72 1,141.58
    C S
    Dec 31, 2015 27.5622 35.2356
    Jan 7, 2016 26.2188 33.1770
    -4.9% -5.8%
    After the dips in Aug & Sep, S&P came back up to around 2100 several times, where as DWCPF only got to a little over 1050. Based on the economic cycle right now, C has provided better returns for about 2 years now but I’m sure both will come back, it is just a matter of how long that may take. I don’t want to ride this out if the economy is heading south so I am a little more risk adverse at the moment.

    #17920

    12squared
    Participant

    The range of relative values of C & S funds seems to ebb and flow. The variation typically exceeds 10% points over the course of any 12 month period. Since 2003 the only exceptions have been when the value of S has risen steadily.

    The aggregate cost of all my S fund holdings is ~$36.24/share. As of 1/8/16, with S at $32.71, their value is down more than %10. Before pulling back into G, I need to consider two things:
    What is the likelihood that I would be able to get back into S at a lower price than I got out?
    Am I likely to gain more in the process than the 10% loss I would realize?

    My strategy is to wait to move from S to C until the S/C ratio is at least 135% – and on the decline again. This will increase my shares in C, regardless of whether the market is up or down. I don’t expect this to be the case for many months. Mid-September and mid-June 2015 would have been good times to move from S to C, at ratios greater than 136% and 138% respectively.

    #17952

    Anne
    Participant

    Think you are make mistake by looking at cost of price per share rather than the overall economic picture. http://www.bloomberg.com/news/articles/2016-01-13/it-s-not-a-sign-of-economic-health-when-soapmakers-lead-s-p-500

    #18107

    Jeff

    I have been following, I don’t want to say advice, but your template. I am currently at 75%-C; 10%-S; & 15%-I. I have noticed though it still seems like the S fund is out earning the C fund when the market is in the green but losing more when the market is in the red. Which seem to happen on a daily rotating basis. Does that have anything to do with the cycle you say the market is in? Do the loses outweigh the gains staying in the S fund at this point?

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