TSP - The "L" Fund

The Lifecycle "L" fund is designed to automatically adjust your money according to the maturity time of the fund. Professionals will adjust the funds between the other five funds; the G, F, L, S, and I. By the maturity time you will have most of your fund, more than 70%, in the G fund. The G fund invests in Government securities. There are five funds; the L 2040, the L 2030, the L 2020, the L 2010, and the L income. Each of these L funds is descending in retirement times. If you are retiring after 2035, then you will put your money into the L 2040. If you are currently retired then you should put your money into the L income.

Advantages - There are some good advantages to this fund.

The fund will automatically adjust to your retirement time frame by professionals. There are volumes of books written about asset allocation and this fund will eliminate that stress.

The fund is very conservative and will probably be very good at asset preservation. Basically, you will not lose very much money.

The fund will likely give you the same returns as any other semi-educated investor. The asset allocation is the same as most conventional wisdom. You will probably see the same returns as everyone else. You will gain when everyone else gains and you will lose the same as everyone else. But you will not lose as much as everyone.

Disadvantages - There are some disadvantages to this fund too. (Solely, my opinion.)

The fund will automatically adjust to your retirement time frame. It is set in stone to the maturity date and not your personal needs. This is not an investor specific fund. It will not tailor to your retirement wants, but it will cover your retirement needs.

The fund is considered too conservative. You won't lose a lot of money but you won't gain a lot either. According to the prospectus of the fund, only the L 2040 is expected to give you more than an 8% return.*

The fund will give you the same returns as anyone else. You will never be able to brag at the cocktail parties. You will do the same thing as everyone else with some financial education.

* Even though the prospectus states that the L 2040 will receive more than an 8% return; the L 2040 has received a 17.41% increase from 3 Nov 05 - 3 Nov 06. These other L funds have seen descending returns respectively to the L income fund with a 7.8% return.

(All fund information can be found at www.tsp.gov) (A flash animation of the funds' asset allocation can be found at http://www.tsp.gov/lifecycle/flash/index.html.)

Why You Need an Emergency Fund
Many Americans today don't have a savings account or emergency fund. I heard on the news on recently that the Commerce Department reported that Americans spend all the money they have and personal savings rates reached the lowest level since the Great Depression.Your emergency fund is your safety net, in case you get sick or lose your job you can ...

Thrift Savings Plans
Thrift savings plans or TSP are tax deferred retirement savings and investment plans administered by the Federal Retirement Thrift Investment Board or FRTIB for federal employees. Thrift savings plans work on the same principle as 401 (k) plans offered by many private employers. All the employees who fall under the Federal Employees Retirement Syst...

Beginners Guide to Index Funds
If your goal is attain financial freedom, investing should be part of your plan. If you're like most people (including me), investing might be intimidating. Investing can require a lot of time and a lot of knowledge.Thankfully, you don't need to be a financial genius to receive the benefit from investing in the stock market. All you need to do is i...

Health Insurance Discussions
So much can be said about health insurance. It is so important to have financial covering for any unexpected illness. Medical procedures and medication are very expensive and the day to day medical help and dental care can cost a small fortune if you do not have any financial assistance.There are many well know medical schemes that one can partic...

Fraud Schemes - 6 Main Types Of Occupational Fraud
Occupational Fraud: The use of ones occupation for personal enrichment through the deliberate misuse or misapplication of the employing organizations resources or assets. -The key to occupational fraud is that the activity: a. Is clandestine b. Violates the employees fiduciary duties to the organization c. Is committed for the purpose of direc...

Selling Annuities Comes to the Rescue for Rising Tuition Costs
For the first time ever, the average cost of a four-year private college rose above $30,000 in 2006-07 to $30,367, according to a report from the College Board. Get used to this number increasing for the 11th straight year, the average cost for total tuition, fees, room and board charges rose faster than the inflation rate. At this rate, to send...

Save Money: 9 Resolutions to Immediately Improve Your Cash Flow
Improving your cash flow and paying down your debt are important goals for anyone to have and I want to help you do just that in 9 easy to follow (and implement) steps.1. Plan Ahead: Having worked in the food industry and looking at sales data, I know that prices in convenience stores can be anywhere from 20% to 30% higher than in grocery stores....