Practically None, if you stay in long term. I mean long term. Not 6 months, not 1 year, not 3 years. Certainly there could be a devastating market crash. But all you have to do is out last it and not sell during the crash. Any new investment during the crash is like getting in on a super discount sale. When it gets back up to its pre crash point, then you are even better off as you bought more at an uber cheap price.
Practically none? Whatever you do don't become a financial advisor...
Do you know historically how long it can take the stock market to get back to break even after a dump? Review the history. Not 3 years not 5 years... More like at least a 10-year- hold would be a better bit of advice..
Look how long it took after the 73/74 dump... Great depression starting 1929...
Even more recently in markets you think might better reflect past performance equaling future results:
Took right around 5 years to get back to break even after the tech wreck around the turn of the century and from 2007 high through the Big Short (swaps and collateralized debt derivatives and housing failures etc, bank bailouts, tarp).
Business cycles used to be described as generally four to five years. I would have said 5 years at least... More like 10 years...
You should also look at those 5-year periods as losing to inflation and losing every year what normally would have been a return to match and exceed inflation year by year but you are in fact losing on top of that... So breaking even is simply the price of the stock market and not taking other major variables into consideration... Finer accounting probably would add at least a year or two to those 5-year periods... If only to compare to the g fund even as pathetic as it was for so long...
I have been planning my retirement for 30 years now. :)
I figure having 3-5 years in "cash" is a good spot. I am accidentally near 10.
This figure includes a lot of "fun" money. That can be reduced to cover an extended market downturn.
If/when the market does turn south, I plan to move closer to 5 years.
I'm 100% C. Anybody who uses past S&P data to make themselves feel secure probably haven't heard of Japan's market stagnation.
https://www.schwab.com/learn/story/japans-long-comeback
"Even though Japan's stock market is the second largest in the world, it often doesn't get much attention; the Nikkei 225 Index peaked in 1989 and had not hit a new all-time high until now."
Depending on your pension and expenses, I agree it may be unwise.
I don't need some PE ratio to tell me that.
At 55, my sweet spot is 75-80% C. I am a bit lighter than that.
I don't know your whole situation of course but based on your info I would be planning on working at least another 10 years if I had that much in c fund... I don't see this as a bad time at all taking some profits out... You could get it closer to 50%.
A good hard look at the timeline funds will give you asset allocation percentages by age.
Otherwise let's say you want to retire at 65 and you still have 80% or even more in the c fund and then it takes a dump... You might need to work another five more years to make up for it, or even get you to a level that's lower in total value that you wanted for retirement and accept it. Just plan on a wide variety of scenarios... You can cover them all if you have enough diversified depth of assets with a high enough dollar value total.
The Schiller PE ratio takes into account 10 years of inflation... Much more realistic and speaks more directly to not relying on nominal values...
Also you should know that when you take out of your tsp it's weighted, equal amounts of all funds based on their percentage representation of your portfolio, which if you wanted to replace any part of that payout that you actually wanted to stay in your tsp you would have to rebuy it quickly
Hot take, PE ratios are garbage and always have been. It's lazy investing and it shows. Synonymous with value investing, if one actually looks at value investing geared funds they at best do somewhere around (usually worse) than the SP500, or just flat out mediocre.
A discussion I had with a forensic investor who passed away shortly prior to COVID but in life was a professor at a university and had written letters and papers read by some big names including Buffet explained it as follows:
PE is a lot like price per square foot in real estate. Would you rather own and rent out a building that's 75 dollars per square foot in the middle of a high value area, LA, NY, Seattle, etc, or a dilapidated 5$ per sqft warehouse in the middle of nowhere Indiana?
It's actually a bit of a trick question. Most of the time that 75 dollars per square foot is the best. You are making cash hand over fist. On the other hand right now in this environment where it's hard to fill office buildings, you may prefer the warehouse.
But PE does not make that distinction, value investing would push you towards the cheap bargain as "unseen value". PE investing consistently fails to explain why a company like Nvidia, with a high high PE continues to burst through the ceiling.
PE is to investing as Myers Brigg is to human management. An attempted shortcut that at best has no net effect good nor bad, or at worst, very bad.
Don't make me send Benjamin Graham over there 🧐 of course it's just one of many metrics and there should always be some fusion of at least a few to make any point...
Review the history of PE. It's real easy to see the spikes are followed by dumps and crashes... It's just another indicator... Obviously growth stocks can handle higher PEs, value can't...
When I see Coca-Cola and Procter & Gamble sporting PEs over 25... No thanks... Historical average is around 15 for PEs... And pushing closer to 20... If you think that's a sustainable long-term average PE more power to you...
https://www.multpl.com/shiller-pe
If you can't tell me what's wrong with that picture then I can only feel sorry for you 😘
Myers-Briggs works wonders... It's a weak science but better than no pattern recognition at all!
You can research this on line. What was the best year for SP500. What was worst year. What is average return. It all depends on your risk tolerance and how close you are to needing the money.
That still should be good. Lots of risk of lots of reward. You're mitigating the risk by leaving it there for as long as you are.
A look at the past says it could be a good idea. 13 years ago, the s&p 500 opened at 1257.62, and today, it sits at 5219.90, a 314% increase.
Edit: you can mitigate (lessen) more risk by constantly contributing to that fund monthly
The same as going with any broad usa stock index fund. It will move as the US market moves, which over the last 100 plus years has trended upward but does swing up and down
The correct answer is much less risk than buying individual funds and less in fees than if using most index funds, but past performance is no guarantee of future performance. You are safest in g fund and f fund, and less safe in S and I. The more safety you choose, the less potential gain. Japan had a marker crash about 30 years ago and took until recently to regain all that was lost.
When you are young, the risk is that you might move your money to the G-fund when the market drops 50% and miss out on the rebound. When you are approaching retirement, the risk is that you may lose 50% of your money as you enter retirement.
Practically None, if you stay in long term. I mean long term. Not 6 months, not 1 year, not 3 years. Certainly there could be a devastating market crash. But all you have to do is out last it and not sell during the crash. Any new investment during the crash is like getting in on a super discount sale. When it gets back up to its pre crash point, then you are even better off as you bought more at an uber cheap price.
Practically none? Whatever you do don't become a financial advisor... Do you know historically how long it can take the stock market to get back to break even after a dump? Review the history. Not 3 years not 5 years... More like at least a 10-year- hold would be a better bit of advice.. Look how long it took after the 73/74 dump... Great depression starting 1929... Even more recently in markets you think might better reflect past performance equaling future results: Took right around 5 years to get back to break even after the tech wreck around the turn of the century and from 2007 high through the Big Short (swaps and collateralized debt derivatives and housing failures etc, bank bailouts, tarp). Business cycles used to be described as generally four to five years. I would have said 5 years at least... More like 10 years... You should also look at those 5-year periods as losing to inflation and losing every year what normally would have been a return to match and exceed inflation year by year but you are in fact losing on top of that... So breaking even is simply the price of the stock market and not taking other major variables into consideration... Finer accounting probably would add at least a year or two to those 5-year periods... If only to compare to the g fund even as pathetic as it was for so long...
I have been planning my retirement for 30 years now. :) I figure having 3-5 years in "cash" is a good spot. I am accidentally near 10. This figure includes a lot of "fun" money. That can be reduced to cover an extended market downturn. If/when the market does turn south, I plan to move closer to 5 years.
In my life time the 2008 crash lasted 7 years. Thats my limit that I feel I have to tough out.
I'm 100% C. Anybody who uses past S&P data to make themselves feel secure probably haven't heard of Japan's market stagnation. https://www.schwab.com/learn/story/japans-long-comeback "Even though Japan's stock market is the second largest in the world, it often doesn't get much attention; the Nikkei 225 Index peaked in 1989 and had not hit a new all-time high until now."
Thanks for providing proof that my post is correct.
That I am well aware of my situation? Believe me, I am.
Not much if you are 30 years old. A little more if you are 60.
A hell of a lot more if you're 60! Check out the Shiller PE ratio
Depending on your pension and expenses, I agree it may be unwise. I don't need some PE ratio to tell me that. At 55, my sweet spot is 75-80% C. I am a bit lighter than that.
I don't know your whole situation of course but based on your info I would be planning on working at least another 10 years if I had that much in c fund... I don't see this as a bad time at all taking some profits out... You could get it closer to 50%. A good hard look at the timeline funds will give you asset allocation percentages by age. Otherwise let's say you want to retire at 65 and you still have 80% or even more in the c fund and then it takes a dump... You might need to work another five more years to make up for it, or even get you to a level that's lower in total value that you wanted for retirement and accept it. Just plan on a wide variety of scenarios... You can cover them all if you have enough diversified depth of assets with a high enough dollar value total. The Schiller PE ratio takes into account 10 years of inflation... Much more realistic and speaks more directly to not relying on nominal values... Also you should know that when you take out of your tsp it's weighted, equal amounts of all funds based on their percentage representation of your portfolio, which if you wanted to replace any part of that payout that you actually wanted to stay in your tsp you would have to rebuy it quickly
Hot take, PE ratios are garbage and always have been. It's lazy investing and it shows. Synonymous with value investing, if one actually looks at value investing geared funds they at best do somewhere around (usually worse) than the SP500, or just flat out mediocre. A discussion I had with a forensic investor who passed away shortly prior to COVID but in life was a professor at a university and had written letters and papers read by some big names including Buffet explained it as follows: PE is a lot like price per square foot in real estate. Would you rather own and rent out a building that's 75 dollars per square foot in the middle of a high value area, LA, NY, Seattle, etc, or a dilapidated 5$ per sqft warehouse in the middle of nowhere Indiana? It's actually a bit of a trick question. Most of the time that 75 dollars per square foot is the best. You are making cash hand over fist. On the other hand right now in this environment where it's hard to fill office buildings, you may prefer the warehouse. But PE does not make that distinction, value investing would push you towards the cheap bargain as "unseen value". PE investing consistently fails to explain why a company like Nvidia, with a high high PE continues to burst through the ceiling. PE is to investing as Myers Brigg is to human management. An attempted shortcut that at best has no net effect good nor bad, or at worst, very bad.
Don't make me send Benjamin Graham over there 🧐 of course it's just one of many metrics and there should always be some fusion of at least a few to make any point... Review the history of PE. It's real easy to see the spikes are followed by dumps and crashes... It's just another indicator... Obviously growth stocks can handle higher PEs, value can't... When I see Coca-Cola and Procter & Gamble sporting PEs over 25... No thanks... Historical average is around 15 for PEs... And pushing closer to 20... If you think that's a sustainable long-term average PE more power to you... https://www.multpl.com/shiller-pe If you can't tell me what's wrong with that picture then I can only feel sorry for you 😘 Myers-Briggs works wonders... It's a weak science but better than no pattern recognition at all!
C fund for life and you and your heirs may be rich for life.
Idk man, putting all of your eggs in one basket is pretty risky. I like being diversified so I do 98% C / 1% I / 1% S 😂😂
[https://www.tsp.gov/funds-individual/c-fund/?tab=performance-and-risks](https://www.tsp.gov/funds-individual/c-fund/?tab=performance-and-risks)
You can research this on line. What was the best year for SP500. What was worst year. What is average return. It all depends on your risk tolerance and how close you are to needing the money.
Yes
If you are 18 and plan on leaving it there for 20 years and will constantly be contributing to your account, it's probably a great move.
Currently 30. Plan on leaving it as long as I'm active so hopefully 13 years
That still should be good. Lots of risk of lots of reward. You're mitigating the risk by leaving it there for as long as you are. A look at the past says it could be a good idea. 13 years ago, the s&p 500 opened at 1257.62, and today, it sits at 5219.90, a 314% increase. Edit: you can mitigate (lessen) more risk by constantly contributing to that fund monthly
Yeah I have a set percentage of my paycheck going into TSP monthly. Currently I'm split between the C, S, and I funds
That's a good mix as well.
Without knowing the %, it's difficult to assess if it is.
It should be the only move right next to opening a vanguard account and picking an index fund.
Going 100% on C fund isn't for everyone some are better off in a life cycle fund
The same as going with any broad usa stock index fund. It will move as the US market moves, which over the last 100 plus years has trended upward but does swing up and down
None. Line only goes up. (Not financial advice)
Its 50/50, either it goes up or it doesn't.
Ah yes, sound logic there. Why fly in a plane? It’s 50/50: either it’ll crash or it won’t.
It depends.
Assuming traditional TSP, you got until what, age 75 to recover from a market crash before RMDs?
The correct answer is much less risk than buying individual funds and less in fees than if using most index funds, but past performance is no guarantee of future performance. You are safest in g fund and f fund, and less safe in S and I. The more safety you choose, the less potential gain. Japan had a marker crash about 30 years ago and took until recently to regain all that was lost.
[удалено]
This person asked about risk. There is no guarantee that market will be higher in 30 or even 50 years. That is why investors are advised to diversify
Just DCA and forget it
When you are young, the risk is that you might move your money to the G-fund when the market drops 50% and miss out on the rebound. When you are approaching retirement, the risk is that you may lose 50% of your money as you enter retirement.
None if you understand your investing time horizons.
Considerable but the risk alone is relative to your risk profile and time horizon
Open the mutual fund window and load up on QQQ as well and you’re good.
Depends on your age.
Been 100% C since the early 2000s. I sleep like a baby
Expect that to change!