This topic contains 3 replies, has 2 voices, and was last updated by Tracy 5 years, 4 months ago.
January 10, 2014 at 3:44 pm #9456
I was reviewing your post about the Vanguard funds. I am interested in purchasing a VB index fund at Vanguard. My question is if you purchase one of these Vanguard index funds and the business cycle changes do you switch your index fund to the corresponding fund or do you remain invested? Unlike the TSP you can’t just move all your money to a G fund to avoid losses so how do you prevent that using thevanguard index funds? I know you can’t give specific advice but I am just curious as to how you invest using these funds.
TracyJanuary 10, 2014 at 3:54 pm #9457
It sometimes depends on what sort of account I am holding the funds in. If it is in an IRA and I can move them without incurring taxes, I will move to the fund which corresponds to the TSP fund I am currently invested in. But if I would be incurring tax gains by selling and buying a new fund, I might be inclined to hold onto at least part of that fund rather than moving it around (so for example when we move to the C Fund, I might well hold onto my small cap funds in a non-tax advantaged account to avoid the capital gains at that time). But if I think we are going to enter a recession, I will sell all of my stock funds and move to a bond fund because I would rather pay some taxes and earn more in the bond fund than watch all my gains disappear as the market declines.
I hope that made some sense.
The TSP Allocation Guide www.TSPallocation.comJanuary 10, 2014 at 7:27 pm #9464
I realize that I didn’t answer your questions very specifically with respect to which funds I would use. I have a list of Vanguard mutual funds and ETFs for each of the TSP funds here: http://www.tspallocation.com/mutual-fund-etf-equivalents-tsp-funds/
The only TSP fund you really can’t match is the TSP G Fund, so if we were in a rising rate environment (as we are now) and I wanted to be out of stocks but also stay away from bond funds like the TSP F Fund, I would have it go to cash. (My brokerage sweeps cash into a very short term debt fund which doesn’t pay much but isn’t impacted by rising rates).
The TSP Allocation Guide www.TSPallocation.comJanuary 13, 2014 at 9:49 am #9512
Thanks Paul. I was thinking of the VB in a taxable account and your insight was very much appreciated!
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