L fund to G fund

[kristen76]

Quick question, it may be a real dumb one too. But during the covid dip in 2020 was it possible to transfer your assets from the L fund to the G fund during the fall and then transfer it all back to the L Fund near the bottom?

I thought I remember hearing someone do this. Thanks in advance.

 

[swill314]

@kristen76 You are allowed two inter-fund transfers per month, they take 1-2 days to process depending on when you do the transfer. Highly recommend you not attempt this unless you have some sort of magic ball that will tell you 1) the start of a crash 2) the precise bottom of a crash. hint: no one can do this

Best of luck, but my advice is dont fuck with your retirement. Dollar cost average, set and forget.

 

[kristen76]

@swill314 I have no magic 8 ball, and Most likely would not do this. Just wondering if it was a possibility. Thank you

 

[swill314]

@kristen76 Yea man, once you log into tsp.gov look for "Interfund Transfer" then just hit 100% or X% into whatever fund. Looks identical to the Contribution Allocation change page.

 

[kristen76]

@swill314 I just did this because we had some funds in the g when we first got in and before we switched to L.

 

[luze]

@kristen76 Yes it's possible with the restrictions above. It's delayed, so if you transfer when the market is down, and it climbs 15% in 2 days, you just missed that bounce.

 

[albein]

@kristen76 You don't need a magic 8-Ball if your investing strategy includes the "safer" investments and a ratio based investment strategy. You just rebalance to maintain that ratio. The market takes care of the rest.

 

[albein]

@swill314 Minor edit, they take 1-5 days to process. Pretty sure they are processed at the end of the day and the order close is about mid-day. So if you make the transfer request in the afternoon on Thursday before a long weekend, they won't make the move until Tuesday afternoon.

 

[holywalk]

@kristen76 Don't time the market. You will lose.

 

[chadwick90]

@kristen76 I had my funds in G during Covid because I never knew my log in to TSP. During the lockdown I reset my password and moved everything into C&S. I unintentionally timed the market but I lost out on gains from 2017-2020 by having my money locked up in bonds

 

[albein]

@chadwick90 Bonds are the F-Fund. G is short term treasuries.

https://www.tsp.gov/funds-individual/

 

[chadwick90]

@albein Thanks

 

[albein]

@chadwick90 The problem with the F-Fund is interest rates. Interest rates and bond prices are inversely related. As interest rates fall bond prices rise, and vice-versa. The Fed has backed itself into a corner. It can't cut rates any further without going negative.

Negative interest rates would trigger inflation as people are less likely to maintain funds in a bank. More capital in circulation, less productive use. Sounds weird but banks are a key part of the financial engine. Less productive use means more dollars chasing fewer products. So, the Fed is facing a double-whammy that has it stagnant.

At some point, interest rates must begin rising. Bonds values are guaranteed to fall. Thus, the F-Fund is going to take a major hit. This is why the F-Fund has trailed G over recent periods.

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Somebody want to step up and explain the downvote?

I suppose you could claim potentially increased coupon payments will offset some of the capital losses, but that requires sale of the current bond and repurchase. This will increase fund expenses. And being forced to pay higher coupons means many bonds will execute their call options. So that means many of these new bonds won't be delivering the YTM.

 

[albein]

@kristen76 NO! I am an advocate for having money in the G-Fund, but NEVER time the market.

You keep *some* money in the G-Fund to secure gains and take advantages of opportunities (like March 2020). That is part of rebalancing based on strategic ratios. Set the ratio and maintain it... based on age and risk tolerance. This allowed me to push in big from my G-Fund and boom for my kids to due a great coincidence that allowed me to maximize the already established plan.

• Yes, I limited my losses on the downside.
• Yes, I made an ass-load of money from this on the upside.
• Yes, You all dogpiled the crap out of me for explaining this exact scenario.
• No, I DID NOT try to time the market. (The crash/recovery was too fast anyway.)
• Yes, I was aggressively opportunistic based on a pre-established plan.

Congrats. You see the light of strategic ratio-based rebalancing and the usefulness of the G/F-Funds.

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NOTE: I probably wouldn't do this with the L-Funds. They already have stake in the G/F-Funds. The manager should already be doing this for you. However, if you're one of the C/S/I-only crew... Ya.

 

[kneeskins]

@kristen76 Back in December of 2019 I felt like something was coming and moved 50% of my TSP. Covid went into full swing and in July of 2020 I pushed everything back to the C and S funds. I think I made 25% that year on the whole.

 

[resjudicata]

@kristen76 You can try and work the system to make a few extra dollars.

https://tspstrategies.com/

But if you have 40 years till you are going to be pulling the money. You will have at least 3 or 4 serous corrections before them.

I put my money in C and S Funds till I was a few years from retiring.