G Fund

[Deleted]

I don't know how many of us are invested in the TSP, but am starting a thread about the G fund.  It is what I am using for the safe part of my portfolio allocation instead of an aggregate bond fund.  

It is a unique financial asset only available to participants of the USG Thrift Savings Plan. Principal is guaranteed and the G Fund rate is calculated by the U.S. Treasury as the weighted average yield of approximately 181 U.S. Treasury securities on the last day of the previous month. The securities are those that have 4 or more years to maturity.

I am planning to have the TSP be completely in the G fund when I retire and will use that and dividends for income.  I can add the TSP from my 401k if I want to, and probably will at times when values are up. My goal will be to have the G fund at 20% of my portfolio at retirement. 

My concern is what the outlook for the G fund will be going forward for the next couple of decades.  I don't think there is an answer, but was interested to see this article which shows the G fund has done well compared to inflation over the long term:

www.barfieldfinancial.com/new-blog/g-fund-vs-inflation


Does anyone have any thoughts on how the G fund might perform in the future?  Will it keep up with inflation?  How would you approach trying to analyze this?  

For me - I might assume a rate of average annual inflation going forward of 3% for the next decade.  No idea how to guesstimate what the G fund rate might be long term though. 

[fishingrod]

www.morningstar.com/articles/1128103/how-good-is-the-federal-governments-g-fund

Article from John M* has some comparisons against inflationary periods over time.

www.morningstar.com/articles/1128103/how-good-is-the-federal-governments-g-fund

[yogibearbull]

I have included TSP G Fund in my Stable Value Tracking elsewhere.

TIAA Traditional Rates, January 1, 2023
Restricted RC 6.50%, RA 6.25%
Flexible RCP 5.75%, SRA 5.50%, Newer IRAs 3.65%
ybbpersonalfinance.proboards.com/thread/142/tiaa-traditional-rates-monthly?page=2&scrollTo=880

TSP G Fund hasn't updated yet for 01/2023 (12/2022 rate was 3.875%).
www.tspfolio.com/tspgfundinterestrate

www.mutualfundobserver.com/discuss/discussion/59753/stable-value-sv-rates#latest

General ybbpersonalfinance.proboards.com/thread/45/federal-tsp-fund-sv

[Deleted]

fishingrod, yogibearbull,

Thank you. I am wondering about thoughts of returns going forward. I would think it would depend on inflation and the projected average yield of the 181 US securities.

[yogibearbull]

TSP G Fund has kept up with inflation. It will have yields similar to intermediate Treasuries but guaranteed - that is typical for SVs. It isn't the best SV. There are noises that the government is paying too much and that is one reason I include it in my tracking that is posted at MFO, Facebook & Twitter. My interest in it is as an observer only. I do have access to TIAA SV.

[johntaylor]

G now 40 percent of my TSP acct, although TSP is not a big part of net worth and have bonds elsewhere

[yakers]

I don't have a prediction about how the G Fund will perform 'absolutely' in 2023 or any time but I do expect it will fit into my AA as part of FI/cash. The G Fund and ibonds I regard as cash and I want to kee my AA at 50% to 70% equities, currently 59/25/16. I see people pursuing CGs, Treasuries and TIPS and I am happy that the G Fund and ibonds cover that for me, The other FI is inbalanced funds like wellesley and Wellington and some preferreds. So, for me, its not just what the G Fund will return absolutely but where it fits in the AA and it is very safe and easy to manage.

[johntaylor]

Since 1987 inception, 4.6 percent

[steelpony10]

Deleted

          www.tsp.gov/funds-individual/g-fund/
 
           Read the second question about the G fund. 

           One has no idea how much they’re going to spend in retirement or for how long. One has no idea how markets will perform in that time. If your G fund is a total set aside that will never be spent except for these unknowns then that complete guess is as good as any if that sets your mind at ease.

            Only overkill (with higher risk) lets me sleep at night. I always plan for the worse outcomes and hope they never happen which has to now covered many unknowns under a variety of market conditions because it offers a wider margin of coverage for those unknown situations.