June 25, 2016 at 1:32 am #18984
One of the very interesting things I discovered in the wake of the Brexit vote was how many readers had made moves in their Thrift Savings Plans in the days and weeks leading up to the vote.
Now that we are past the vote, I’m curious as to what people’s plans are for their allocation going forward, and their rationale for doing so.
I will start to get the conversation rolling, but am always afraid that posting my opinion will stifle alternative views because it is my website. Please feel very comfortable to disagree and share whatever you are thinking.
The TSP Allocation Guide www.TSPallocation.comJune 25, 2016 at 1:46 am #18985
One guy’s take: my allocation will remain 85% C and 15% I for the short term, but I will likely move to 100% C Fund before long.
I’m not leaning towards moving out of the I Fund because I think the UK vote to leave in a few years by itself will be so damaging to international developed markets, but rather because this will create ongoing uncertainty and raises the specter of other countries following the UK’s lead, creating additional fundamental concerns swirling around the European common market.
But I also won’t dump the I Fund immediately after this setback. Selling after a sharp drop is never a good idea unless the underlying economy in question is concurrently going into recession (in my opinion). From a business cycle standpoint, I think the I Fund should bounce back in the short or mid-term and will recover most or all of its losses from today. But even though I think the selling was overblown, I’m not nearly confident enough to jump into a larger I Fund allocation.
I will reevaluate my position regularly, with a long-term bias towards selling.
The TSP Allocation Guide www.TSPallocation.comJune 25, 2016 at 3:01 am #18987
I am glad that I was totally out of the I fund on the 23rd. I’m very risk adverse with my TSP at the moment, I will probably see how things settle before getting back into C Fund.
Although everyone says there shouldn’t be any impact on US Stock Markets, my primary concern with Brexit are (1) further depression on earnings for our large international companies due to relative strength of the dollar in comparison to both the EURO & GBP and (2) potential contraction/recession as result of global issues. (Although I know banks are ready to ensure liquidity by infusing $$$ in global markets if necessary, I don’t think we fixed the underlying causes of the 2008 financial crisis & monetary policy is limited with current low rates).
I was glad to see the UK vote to leave and believe that they will be much better off in the long run outside of the EU; however, this will be a long process and the increase of Euroscepticism across Europe could be an ongoing theme for the next several years. Although I may avoid the I Fund for awhile, I am considering possibly investing in some type of FTSE 100 Index equivalent or UK specific stock instrument in my Roth for this year. Anyone have any good ideas or recommendations?June 25, 2016 at 12:38 pm #18989IanGuest
I sold off my ETF position at noon on Thursday, the day before the vote, because of the risk of whipsaw. These are funds I use to make money on short term trends… locking them in and stepping out of the way. The TSP funds I left in place 85% C and 15%, but I should have seen not much upside to staying with the I fund, while the downside appeared to be substantial. In a do-over, I would have moved 100% C, or even 50% F. I will be looking intently for a exit opportunity for my 15% I fund position.
I am comforted, that I have 15 years before retirement to make better decisions. I do think the US economy is stable, and growing. However, I will want to watch closely the fallout in Europe. I am concerned that a downward spiral could translate across the pond and expedite a US recession. Then again, I am a novice when it comes to markets and the economy, but I am learning!June 25, 2016 at 1:02 pm #18990JasonGuest
I went to F on Thursday. To much risk to let it ride. Will wait for a upward trend and go back in.June 25, 2016 at 6:51 pm #18992MorganGuest
I’m keeping my allocation the same 80% C Fund and 20% I Fund. Currently I’m sitting slightly off my target with 17% I, but I plan to take the opportunity over the next several weeks to buy more I (and VEA in my ROTH and brokerage accounts) to get up to 20%. I’m only 27 so I’m comfortable with the volatility and think many of the doomsayers w/regard to Brexit are overstating the impact of the U.K. leaving the EU.June 26, 2016 at 7:35 pm #19007LauraGuest
I plan to move out of the C fund and into the F fund tonight. I am currently 80% C, 15% S and 5% I. I generally do not move things around very much because it seems hard to know what the market will do…however it seems pretty certain that the market will go down for a couple of days. When it starts to go back up I will move back into C and then see what Paul recommends.June 26, 2016 at 11:52 pm #19012
It is kinda like catching a falling knife at this point. If you believe that the US economy is doing well, it seems pointless to move to safety since C Fund took a big hit Friday and probably another one tomorrow while F Fund went up +0.57% on Friday. It only makes sense to move to safety if you think that we will go into a recessionary period, per TS Paul’s business cycle method of investing. When everyone starts selling in response to an event, it feeds the fear and we get a greater downturn.June 26, 2016 at 11:57 pm #19013
You started the conversation without giving your views. When are you going to share?June 27, 2016 at 12:58 am #19015
“The problem with selling now is that you have to get back into the market,” he said. “When will the client who is nervous now not going to be nervous about buying back in? The answer is when there is less uncertainty, which, nearly by definition, is going to be when the market is higher.”
Interesting comment about I Fund equivalent, one financial planner has been telling clients to get out for the 1.5 years, which is very different from Paul’s perspective.June 27, 2016 at 4:26 pm #19032Bruin79Guest
I don’t hardly ever move or change funds often but in hindsight I should of moved to the G fund prior to the Brexit this past Friday and today Monday 27 Jun 16 it’s gone down another 260 or so, that’s over 860 points way too much of a drop for 2 days to just let it ride, should of moved into the G fund then get back into stocks after, hopefully this settles down and stabilized out but I really didn’t think Brexit would happen. So I was in C fund 80% and S fund 20% prior to past Friday and will remain the same, can’t change now, too much of a loss, in the future I will moved to the G fund if something like this would occur again.June 27, 2016 at 9:04 pm #19038LauraGuest
I actually had about 20% in I and 30% in S and 50% in C…I moved out of S and I and put that into F…but tonight I am just going to move it all into C and hope it goes back up. I wish that it did not take until the end of the business day for it to become effective.June 29, 2016 at 8:32 pm #19076
Anne – the second post in this thread was my plan.
Nothing has really changed since I wrote that. I was happy to see the markets turn around as strongly as they did yesterday and today, but I expect we will see some additional Brexit induced volatility as new developments come out over the coming weeks and months.
The TSP Allocation Guide www.TSPallocation.comJuly 13, 2016 at 11:51 pm #19294UstasubParticipant
I just rode it ou, in this for the long haul. I’d be interested in your take on negative bond yield rate trend of late and consequences if any.
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