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TSP G Fund Yield Up to 3%!

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  • TSP G Fund Yield Up to 3%!

    Celebrate with me for a moment. One of my investment holdings has been waiting for 16 years now for its moment in the sun and that moment has arrived. As rates have fallen over the last couple of decades, it's been all bad news for the G fund. Lower yields but no higher value because the G fund provides treasury yields with money market risk. Where does it shine? Well, it shines when rates rise. Because you get higher yields but no decrease in value like most bonds. Since December, the TSP yield has gone from 1.5% to 3%. Heck in August it was just 1.25%.
    May 2022 3.000%
    April 2022 2.500%
    March 2022 2.000%
    February 2022 1.875%
    January 2022 1.625%
    December 2021 1.500%
    This is as exciting as it gets for this particular investment! The last time it breached 3% was in 2018 and before that....nobody really remembers. Probably 2007.

    If only inflation wasn't 9%....
    Helping those who wear the white coat get a fair shake on Wall Street since 2011

  • #2
    Don't blame the G Fund, blame the Fed for the crazy monetary policy of the last dozen years. The G Fund is the proverbial free lunch. Principal protection on a weighted yield of all Treasury notes and bonds with maturities >= four (4) years.

    Investors have long discounted the protection value of cash and cash equivalents. They will find a sound lesson in today's/tomorrow's close correlation in stocks and bonds as they both go south together.

    Warren Buffet is 100% correct. The stock market is now a gambling den. With so few investors following MPT. It is no wonder the ultimate Ponzi scheme (Crypto) is all the rage.

    If only I had access to the G Fund to blunt the combined stock/bond bear markets. The only good news is that I have substantial iBonds in taxable and individual TIPs in tax-advantaged accounts. Both dating up to more than 20 years ago.

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    • #3
      Why can't you just wait until the G fund rates have gone up to where the risk/reward ratio seems good to you and then shift your money into it then?

      I know market-timing does not work for the stock market but the volatility of the G fund seems much lower and much more predictable than the stock market. I also understand that you need to factor in the unpredictability of wherever else you plan to invest that money... but it seems reasonable to guess that the risk/reward of the G fund is better now than back when the G fund was giving 1.5% returns. So why can't you time something like the G fund?

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      • #4
        I see more G fund celebrations in your future.

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        • #5
          Originally posted by Dusn View Post
          Why can't you just wait until the G fund rates have gone up to where the risk/reward ratio seems good to you and then shift your money into it then?

          I know market-timing does not work for the stock market but the volatility of the G fund seems much lower and much more predictable than the stock market. I also understand that you need to factor in the unpredictability of wherever else you plan to invest that money... but it seems reasonable to guess that the risk/reward of the G fund is better now than back when the G fund was giving 1.5% returns. So why can't you time something like the G fund?
          One could do that. But your other options are stocks and bonds in the TSP.

          Personally, I use a fixed (static) asset allocation because my crystal ball is always cloudy. So far this year, my stocks and bonds are down but the TSP hasn't lost any principal. And it is now paying a higher yield. Just a little something to celebrate in some not so good times for investors.
          Helping those who wear the white coat get a fair shake on Wall Street since 2011

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          • #6
            As a federal employee my spouse has access to G-fund through TSP. And I am glad with upcoming increases in interest rate we were wise enough to realign our bond allocation from 75 intermediate bonds + 25 G-fund to 90 G-fund + 10 intermediate. With further downtrend in the market, I am curious what our autorebalance will do come May-June.

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