Tsp suggestions

1

I’m 40 with $115,000 in the TSP

The total stock market index is 4,000 to 5,000 US stocks. It contains 87.5% S&P and 12.5% small cap - Source Vanguard. I prefer a 40% small cap and 15% international thus leaving 45% for large cap

How does the S Fund compare to the S&P 600 and Russell 2000 for small cap stocks or the S&P 400 and Russell 3,000 for mid cap stocks? It seems like the DJ Completion Index is just a filler for large cap stocks and not a true small cap fund for true diversification

I contribute 11% post-tax of my $74K and get a 5% pre-tax match. I also have a small Roth IRA that made 27% last year vs 19% for the TSP vs 26% for the S&P. I currently have 50% in the L Funds and 25% small cap and 25% large caps. This still leaves me with a ton of international stocks and 10.375% bonds / cash

Any suggestions? I can drop the 50% in L Fund to 30% and increase my G, F, C, and I funds to compensate which results in less I Fund and more S fund

Any ideas

2

You have the most important boxes checked to achieve your retirement portfolio goals with an 11% post- tax contribution, a 5% pre-tax match and with investing in low-cost TSP funds. What is your current asset allocation for all your retirement accounts and what is your desired asset allocation?

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5

Thanks for your help and encouragement.

Currently at 74% since I thought the market was expensive but desire to be at 85-95% as a 40 year old

6

A very important consideration is your risk tolerance, the amount of market volatility and loss you are willing to accept as an investor. It is not easy but try to figure out what is the highest percent stocks that you would be comfortable with in your portfolio so that you would not to sell or buy based on market fluctuations. The L fund follows a predetermined fixed “glide path” so you will have more flexibility to reach your desired asset allocation by reducing your exposure to the L fund.

This is somewhat of a grey area, but I do not think that there is a long term benefit to factor investing e.g. small cap, value etc. I am comfortable with a 3-fund index portfolio of Total Stock Market (or S&P 500), Total Bond Market and Total International Market.

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8

I can remember getting cute with value funds and small cap stocks because there is so much hype / misinformation or these being “cheap”

I decided to put 13% in the L 2050 and 2055 funds, 5% in the G, 5% in the F, 32% in the C, 27% in the S, and 5% in the I.

This should translate to a 87.5 / 12.5 portfolio

9

This recent article is a good short review of value versus growth investing. " Historically, value investing has outperformed growth investing over the long term. Growth investing, however, has been shown to outperform value investing over the last 25 years." Maybe things will revert and value will again outperform value in the future but there is no way to know ahead of time.

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10

Agreed. Also value funds tend to be subjective