Reallocation Gone Bad–Possibly

THE THRIFT SAVINGS PLAN ALLOCATION GUIDE Forums Message Board Reallocation Gone Bad–Possibly

This topic contains 9 replies, has 3 voices, and was last updated by  Chris S. 3 years ago.

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  • #17650

    Chris S.

    Anticipating retirement in the coming months and having had the good fortune of building a TSP portfolio of about $1 million, I became a little nervous during the recent downturn and moved about 80% from the C and S to the G Fund. Wow, shortly thereafter the market rose beyond that dip and I missed a sizable increase in value.

    It’s unclear if I will need the TSP in retirement as I will have a pretty good annuity and we’ve not yet decided on whether or not to sell our home and pull its equity for use in retirement activities such as travel, relocation and the like, or frankly, whether I will actually fully retire. However, I think I need to jump back into the C and S, either entirely or partly, and now have to make the call on when to do it. Lesson learned–timing the market, which is what this exercise turns out to be, is a fools errand. And, the reason the portfolio is as high as it is, was that I invested 10% annually in the C, S and I Funds during my career.

    TS Paul, what advice have you, as I’ve lost my way?

    #17653

    Chris S.

    Hey fellow investors, I was not limiting my request for advice to TS Paul–any thoughts to share out there? Thanks.

    #17658

    Anne

    I don’t like moving a large percentage of any fund at once, I think my largest move to the G Fund back at the end of 2009 when we coming out of the recovery was 13.5% percent which was stupid as it was based on emotion and trying to protect a certain amount in my TSP after watching my TSP shrink substantially for over a year. The only half decent decision I made during that time was moving a little over 8% from G to the stock funds. That is why I like TS Paul’s method of investing based on the business cycle…would have made a lot more if I had not left 10% in G.

    I took advantage of the dip by increasing stock funds by total of 5%, but I had been increasing G/F funds to 25-30% combined over the last year & a half and have been trying to time my interfund transfers, which has been a learning experience. I plan on retiring under VERA/VSIP early next year.

    #17659

    Anne

    With the current market, you may want to wait for the next dip/downturn, but it is really hard when you have to make the transfer in TSP before noon EST.

    C Fund S Fund I Fund
    28.1065 36.2096 24.7805 as of 20 Nov 2015
    28.4005 39.3314 27.2081 maximum TSP $share to date

    I look at equivalent indexes prior to making any inter fund transfer, but as you are probably aware, the direction can change after you make your decision. That is why I make changes incrementally. Still trying to figure out what to do in the near future after digesting the material on this site.

    #17664

    Chris S.

    Thanks Anne! Based on the business cycle analysis provided by TS Paul’s blog I think I will jump back in to the S and I Funds. I wish I had stumbled upon it before I had made the October move. If I wait for a dip again in an attempt to minimize the losses I incurred when I jumped out in October, I might miss the benefits of a continuing upward trend. If I wait I will be making the same mistake I made before–I don’t think that I am participating in ‘timing’ when I’m doing it, but I actually am. As such, I am going in for the long term and will follow the business cycle analysis and monthly reports. Fortunately, I don’t really need the TSP now and a long term strategy is decidedly the best approach. And, I recognize the market can dip at anytime. Lesson learned though–go long!

    #17710

    Diana renee

    I changed to the s and I funds… Liitle in the c fund three weeks ago and I have lost a lot of money. I’m in panic mode. Should I hold still or move it back to the G fund???

    Halp!

    Diana

    #17714

    Anne
    Participant

    Diana,

    How many years do you intend to work? There has been a lot of volatility in the market lately, but in the long run the market should go up. In the mean time, any new contributions in these funds will be at a bargain price. Next week we should find out what the FED actually does with interest rates.

    I suggest you stay put. If you switch everything back to G, you will have locked in those losses. Make sure you subscribe to get TS Paul’s updates by email and don’t look at your account until you get the December update (hopefully it will come out soon).

    #17718

    NokieVA
    Participant

    Chris,

    Invest aggressively now .. however,

    and on a slightly related topic to your question …

    It depends. Truly, the answer for everything.

    If your intent is to leave the TSP account alone, then invest it with long-term goals – for growth.

    If you want to get an annuity soon, be conservative.

    I would personally do the following at retirement (my current plans) – begin taking out monthly payments from TSP and manage the TSP investment as a long-term growth fund (aggressive strategy). You are allowed to change the monthly withdrawal amount once per year. Change this amount yearly based upon your age, the amount of last year’s return, and taxation considerations. The unused monthly payment money can be reinvested as you see fit, which might include gifting to relatives to avoid taxes if your intent is to later give it to them anyway. Another benefit, you are ridding yourself of the tax burden on the TSP withdrawals at a steady, relatively low rate into your existing retirement income framework.

    Cheers,
    Jeff

    Cheers,
    Jeff

    www.TSPinvestor.com

    #17759

    Bruin79

    Chris S.
    May I ask what percent have you been invested in the C and S fund ? I haven’t taken the jump to the I fund yet and still stay fully invested in the C at 70% and S fund 30%, you have seem to do well with a million in your portfolio, I was thinking of changing mine to 80% S and 20% C fund. Thank you.

    #18063

    Chris S.

    Well, fellow investors, apologies for the delay in acknowledging your advice. Very insightful and appreciated. I jumped back in the the C, S, and I at 40%, 40% and 20% respectively, at 17,300-ish, watched it continue the upward trend and then recently saw the plunge! I am reallocated at. 50% C and 50% S, where I was originally, only having locked in my losses. In hindsight, the market did go in the direction I thought it would go and for all the reasons I thought it would, in time. But just as I didn’t anticipate the jump up before the fall, I’m sure I can’t see next month’s market moves. I’m not even sure the business cycle data is accurate because the gov data in which it is based has been ‘changed’ (i.e. Full time employment is now 32, not 40 hours, as well as several other similar changes).

    I’m in for the long haul for now and until I know my next moves–will I remain working and will I sell the home this spring, I will stay in C and S, co tinting to bet on the strength of the U.S. Economy.

    Thanks all…

    Chris

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