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That's nice but entirely irrelevant. If you were 100% allocated in TSP G Fund and Treasury yields spiked across the curve, your account balance never goes down
by metaphor 3y ago
That's nice but entirely irrelevant.
If you were 100% allocated in TSP G Fund and Treasury yields spiked across the curve, your account balance never goes down and you could withdrawal the entire amount at any time without losing a single penny.
If you were 100% allocated in 10-yr T-notes and Treasury yields spiked across the curve, well...you'd be swallowing a substantial loss proportional to your unhedged duration exposure if you were either to liquidate your position before maturity or before yields normalize.
This[1] is what you don't understand.
[1] https://www.investopedia.com/terms/b/bond-yield.asp https://www.investopedia.com/terms/b/bond-yield.asp
- wing-_-nuts 3y agoYeah, I do in fact understand the inverse relationship between yield and price. What I'm saying is that in practice it doesn't really matter with respect to the G fund. I don't know anywhere else one can get a risk free return equivalent to a 10y bond. This whole thing is a very odd, pedantic thing to argue. There's a reason why they make up most of the bond portion of my portfolio.
- metaphor 3y ago> I don't know anywhere else one can get a risk free return equivalent to a 10y bond. How about equivalent risk-free return, even better yield, upside potential, optionality...and you don't need to be a federal employee to play? It's been hiding in plain sight[1][2] for over a year now, but I'm not a financial advisor and certainly not your financial advisor...just an interwebs rando with a hobby positing food for critical thought. [1] https://fred.stlouisfed.org/graph/?g=17THg https://fred.stlouisfed.org/graph/?g=17THg [2] https://fred.stlouisfed.org/graph/?g=17THh https://fred.stlouisfed.org/graph/?g=17THh