When to modify allocation to change strategy

THE THRIFT SAVINGS PLAN ALLOCATION GUIDE Forums Message Board When to modify allocation to change strategy

This topic contains 3 replies, has 3 voices, and was last updated by  TS Paul 4 years, 1 month ago.

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  • #12623

    Stinky
    Participant

    I’ve always been a “hands-off” investor. I’m currently 100% 2040 Fund. I’ve recently started educating myself and appreciate your “business cycle” method. My question is when should I make the transition from the 2040 allocation to an allocation of just the basic funds?

    #12643

    TS Paul
    Keymaster

    I can’t give any sort of individual advice, but I can tell you how I approach allocation changes in my own accounts:

    If I am reasonably convinced that the fund or stock which I am buying is trending up, I will not “average in” by buying at different times. Instead I put whatever funds I am investing to work right away.

    In contrast, if I am buying a stock or fund which is beaten up and possibly still falling, I will use the dollar-cost average strategy and invest fixed amounts over time. That results in buying more shares when the price is lower and less when it is more expensive, and results in a lower total average cost per share. So at the tail end of a recession, for example, I might move a fixed percentage from the F Fund to the S Fund each week or month to hedge against the market moving lower.

    I hope that helps a little. -ts

    The TSP Allocation Guide www.TSPallocation.com

    #15596

    Jeff

    Could someone please explain the importance of the Distribution of Account percentages. Should they mimic my contribution allocations. Currently I’m at G:5%, F:5%, C:60%, S:25%, & I:5%. My distribution amounts are about the same. I would like to keep my contribution amounts the same but I would like to move some of my totals in my C & S funds over into my G & F funds. I have about 10 to 15 years before retirement but due to health concerns I may have to go earlier than that. Any advice would be appreciated.

    #15704

    TS Paul
    Keymaster

    Mine mimics my contribution allocation, but there is nothing magic about that. Where your existing balance is allocated makes a much bigger difference to your returns as that is where the vast bulk of your invested funds are.

    The TSP Allocation Guide www.TSPallocation.com

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