Re: [TSP_Strategy] Re: Dollar cost Averaging Within TSP for Retirees

 

I'm no professional, but there is no way in heck I'm keeping 80% in the G fund during retirement earning 2.6% average over 10 years when the C & S funds are averaging 7-8%.  I'm also not going to set it and forget it. If the trend is negative I may move to safety but otherwise I'm in it for the long term.   My account is double that of coworkers who played it safe in the G and L funds the last 20 years and that is with me taking taking the 30%+ losses.  We have a pension and SS to fall back on. 

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On Thursday, September 7, 2017, 6:22 PM, Michael Bond michaelhbond@yahoo.com [TSP_Strategy] <TSP_Strategy@yahoogroups.com> wrote:

 

Flyingjed

You asked an interesting question and it really got me thinking.  I have been wanting to compare some of the more common investment strategies discussed by investors and dollar cost averaging is one of them. So I did a little research and found a lot of conflicting information.  I guess I should not be surprised, but it motivated me to write a post on the subject (link below for the full answer and some other thoughts). 

The shorter answer is that your idea may have a lot of merit depending on your objectives and assumptions about the market.  If you believe as I do that the market is over-valued and now is an "opportune time" to move to the G fund then need a way to begin moving back into the market later, it has a lot of merit.

On the other hand, dollar cost averaging is not an investment strategy as many seem to think and you still need a risk-mitigation strategy to protect nest egg from large losses – which I define as market risk.  If you are following the TSP Strategy Group as your investment strategy, that is fine but you should allocate the percentage to equities based on your years to retirement and not go 100% with the group.  

The professionally managed TSP Lifecycle funds only allocate 20% to equity funds for retirees, 6% TSP F fund and 84% to the TSP G fund.  So if you are over-allocated to equity funds for your situation it would be another reason now is an opportune time to move to the G fund. You just should not dollar cost average back to a very high allocation later.

The longer discussion is posted here  https://report.tspsmart.com/2017/09/07/dollar-cost-averaging/

Cheers,

Michael Bond

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Posted by: Mike Johnson <kavic0906@yahoo.com>

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