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Dallen Haws at Haws Financial Planning
Sierra Vista, AZ
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Which L Fund is the Best?
When it comes to planning for retirement, one of the most crucial decisions you will have to make is how to invest your retirement savings. While there are several options available, the Lifecycle (L) funds offered by the Thrift Savings Plan (TSP) have gained considerable popularity among federal employees and members of the military.
The TSP L Funds are a collection of professionally managed investment portfolios that automatically adjust their risk levels based on your target retirement date. The funds are designed to be a one-stop solution for investors, who do not have the time or expertise to actively manage their investments.
There are five L Funds available, each with a different target retirement date ranging from 2025 to 2055 and beyond. The L Income Fund is specifically designed for those who have already reached their target retirement date. As you get closer to your target date, the L Funds gradually transition from a more aggressive mix of stocks and bonds to a more conservative allocation.
So, which L Fund is the best for you? The answer depends on various factors including your age, risk tolerance, and investment goals. Younger investors with a longer time horizon until retirement may have a higher risk tolerance and can opt for an L Fund with a later retirement date. These funds tend to have a higher allocation to stocks, which historically provide higher returns over the long term.
On the other hand, if you are nearing retirement or have a lower risk tolerance, an L Fund with an earlier target retirement date might be more suitable. These funds have a higher allocation to bonds, which are generally considered less volatile and more risk-averse than stocks.
It is important to note that while the L Funds offer a convenient option for retirement investing, they are not the only choice available. Some investors prefer to create their own personalized investment strategy, considering factors such as individual risk tolerance, market conditions, and personal financial goals.
To determine which L Fund is the best fit for you, it is advisable to review each fund’s asset allocation strategy, historical performance, and expense ratios. It can also be beneficial to consult with a financial advisor who can provide personalized guidance based on your unique circumstances.
It is worth mentioning that past performance is not indicative of future results. While an L Fund may have performed well in the past, there is no guarantee it will continue to do so.
Ultimately, the best L Fund for you depends on your individual circumstances, financial goals, and risk tolerance. It is recommended to thoroughly research and consider all available options before making a decision.
I had my money in the L2040 fund. After researching, I found out that the rate of return isn't that good at 7.59% for a 10 year period. so I'm moving my $60k to the C fund and S fund since the C fund has 11.89% and the S fund has 8.54% of returns during the same time period. My asset allocation will be 60% for the C fund and 40% asset allocation for the S fund. I don't need that money for at least 15 years, so I don't mind having more risk for better return. The L funds have some G funds in the mix. I don't like the L2040 fund for my particular situation. I don't think it was wise to leave my money in there for like 12 years honestly. But I'm getting more proactive with this TSP deal. Thanks for all the tips and videos! Here's where I found those rates of returns :
https://www.tspfolio.com/tspfunds
I just retired on 12/31/2021 and I had my money in L 2025 fund which performed well, my question now since I retired I do not have to touch my thrift money and how aggressive should I be in retirement? I want my to still work for me but I don’t want the heavy burden. Should I go to a later L fund?
What best for a retiree? L income or just stay with the letter funds?
Can you please talk more about the down sides of the l fund
The L2050 is by far the best. Just keep it going. Just my opinion.
Are the L funds beneficial in terms of dollar cost averaging with contributions?
I’m less than 2 years from retirement. This channel is very informative and easy to follow. Thanks for doing it!
Very good explanation. Thanks!
The fundamentals of L funds is that The longer the fund target year is the more aggressive is that fund is going to be. For example L2065 will be more aggressive than lets say thank L2050 which would be more conservative. As the other comment mentioned L is conservative in TSP because there are only 5 funds to choose from ie. C, S, I and on conservative side F, S. I personally huge huge fan of C and S.
Do you have a video on how RMD requirements have changed because of COVID 19 and the new retirement RMD reduction till age 72?
Are the L funds in TSP which are managed by Blackrock, comparable to the Blackrock Lifepath Funds available outside the TSP. Morningstar rates the 2020 Blackrock fund as a 5-star gold rating, the best of the best. I also noticed the TSP funds are much more conservative.