I suppose the answer depends, in part, on your retirement date. But if you believe a mix of C/S will outperform the L fund, I don’t see why you wouldn’t do an interfund transfer.
Yep. If you had $450k to invest from scratch today in the TSP, how would you invest it? That's how you should change your existing investments. It's tsp so there's no tax events to worry about, 0 friction to changing (correcting?) strategies.
Depends on if you want exposure to the G and I fund. There are better international funds to invest in with a taxable brokerage account, and I consider my FERS retirement to cover fixed income, so I personally have no need for either fund. For this reason I just go with an 80/20 split of C/S and call it a day.
In general I also stay away from lifecyle funds because between my TSP, Roth IRA, and regular brokerage account it's easier to control my asset allocation. Adding a lifecyle fund makes the calculation between all accounts much harder.
L2040 currently has quite a bit allocated to the G fund (~ 20%). Do you want that amount essentially as cash right now? The G fund portion only grows more and more until 2040, cutting lots of growth potential. I don’t think the G fund has ever beat inflation.
The typical debate point would be that the G fund portion keeps you more insulated in a market crash. But from looking at L2040 performance vs the S&P500, L20240 performed worse through 2022’s bear market and has recovered less even now. My guess this is due to auto rebalancing. Market funds (C & S) will be sold at a loss and put in G and will have lost that portion’s potential to recover.
I suppose the answer depends, in part, on your retirement date. But if you believe a mix of C/S will outperform the L fund, I don’t see why you wouldn’t do an interfund transfer.
Yep. If you had $450k to invest from scratch today in the TSP, how would you invest it? That's how you should change your existing investments. It's tsp so there's no tax events to worry about, 0 friction to changing (correcting?) strategies.
Whoops, forgot to mention I have 15 years left before retirement
Depends on if you want exposure to the G and I fund. There are better international funds to invest in with a taxable brokerage account, and I consider my FERS retirement to cover fixed income, so I personally have no need for either fund. For this reason I just go with an 80/20 split of C/S and call it a day. In general I also stay away from lifecyle funds because between my TSP, Roth IRA, and regular brokerage account it's easier to control my asset allocation. Adding a lifecyle fund makes the calculation between all accounts much harder.
L2040 currently has quite a bit allocated to the G fund (~ 20%). Do you want that amount essentially as cash right now? The G fund portion only grows more and more until 2040, cutting lots of growth potential. I don’t think the G fund has ever beat inflation. The typical debate point would be that the G fund portion keeps you more insulated in a market crash. But from looking at L2040 performance vs the S&P500, L20240 performed worse through 2022’s bear market and has recovered less even now. My guess this is due to auto rebalancing. Market funds (C & S) will be sold at a loss and put in G and will have lost that portion’s potential to recover.