In this conversation, Omen Quelvog from Formynder Wealth Management discusses the Thrift Savings Plan (TSP) and its various investment options, including core funds and lifecycle funds. The discussion covers the characteristics of each fund, their risk profiles, and how to effectively allocate assets within the TSP. Omen emphasizes the importance of understanding one’s investment strategy and not overcomplicating the investment process. The conversation also touches on the unique aspects of the G fund, the potential risks and rewards of the S fund, and the benefits of using lifecycle funds for those who prefer a hands-off approach to investing.

Chapters

00:00 Introduction to Omen Quelvog and Formynder Wealth Management04:02 Overview of the Thrift Savings Plan (TSP) Funds

06:50 Deep Dive into the C Fund: Large Cap Investments

08:29 Exploring the S Fund: Small Cap Opportunities

12:21 Understanding the I Fund: International Investments

16:19 The F Fund: Fixed Income Insights

21:23 Understanding the G Fund: A Unique Investment Option

23:58 Exploring Lifecycle Funds: The Easy Investment Solution

30:39 Investment Philosophy: Tailoring Portfolios for Clients

35:30 Navigating Lifecycle Funds: Glide Paths and Risk Management

42:02 Crafting a Portfolio: Core vs. Lifecycle Funds

Takeaways

TSP offers a variety of investment options including core and lifecycle funds.

The C fund is often considered the foundation of a TSP portfolio.

The S fund provides exposure to small-cap stocks, which can be riskier but offer potential rewards.

The I fund includes international investments, which can enhance diversification.

The F fund is a bond fund that provides fixed income exposure.

The G fund is unique as it is tied to the US Treasury rate, offering stability.

Lifecycle funds automatically adjust risk based on the target retirement date.

Investors should consider their risk tolerance and investment timeline when choosing funds.

It’s important to understand how different funds work together in a portfolio.

Investing in TSP is beneficial, and simplicity is key to effective management.

Links

You can reach out to Omen Quelvog at ⁠4myndr.com⁠

Schedule a consultation with Mike: https://nextmissionfinancialplanning.com/contact/   

Schedule a consultation with Amy: https://www.instarfp.com/contact

TRANSCRIPT

Amy (00:01)
Today we have Omen Quelvog from Formynder Wealth Management joining us today to talk about a topic that I think a lot of people feel like they have a really good handle on, but honestly I don’t think we can review it enough and that is a deeper dive into the TSP investments that are available. So the core funds as well as the life cycle funds and then how you put those together. So super excited to jump in with Omin.

Mike Hunsberger (00:28)
Thanks, Amy. Looking forward to it.

Mike Hunsberger (01:04)
Welcome back everybody. Thanks for joining us today. We’ve got a special guest, Omen Quelvog from Formynder Wealth Management. ⁓ And as we said in the intro, we’re going to be talking about the Thrift Savings Plan and really drilling down kind of into individual investment choices that are available within the PSP and why you might want to consider them and how you build your asset allocation. So welcome Omen and ⁓ mind just

giving us a little background on yourself.

Omen (01:36)
Yeah. Thanks Mike. Thanks Amy. ⁓ So I retired from the Marine Corps in 2024, so not too far away. And ⁓ I knew before I retired that I wanted to get into the financial profession. I just didn’t know exactly what I wanted to do. ⁓ So through a skill bridge with the Military Financial Advisors Association was able to kind of whittle that down to something that I felt was most beneficial to my life.

in the way that I want to enjoy my life post military retirement and helping others through their finances was the way to do it. And so I’ve had some great examples like your both of your firms to and quite a few others actually to just help me open up my own firm and did that just last year last May. So haven’t even had a year of business under my belt yet but have been loving it so far. So it’s been a really great experience.

Amy (02:35)
Can you share the name of your firm and how you came up with that name? Because I think it’s pretty cool. It’s a story worth telling here.

Omen (02:42)
Sure. So ⁓ when I originally wanted the name, I wanted something to do with Guardian. So my firm is a faith-based firm, but also, ⁓ as far as Guardian goes, I wanted people to have trust. But you can imagine Guardian in a financial planning firm, wealth management firm, is fairly popular. And so I threw this over to my family, and my sister said, well, don’t we just

kind of bring our heritage into this. And let’s take a look at the Norwegian translation for guardian. And it was formander. And so I said, oh, man, that just rolls off the tongue. So I said, winter chicken dinner, you are it. And that is the name. So yeah, so it’s the call sign of the very first unit that I was assigned to in Yuma, Arizona, guardian. And then, yeah, also bringing a little bit of heritage into it as well.

Mike Hunsberger (03:23)
the

Amy (03:23)
You

Yeah, I love it. it’s not here, but probably in the show notes, a link to your firm with the logo. Pretty cool. think your wife designed it, right? Yeah, just a… Yeah, yeah. Well, ⁓ being in business is a team sport, ⁓ so I think everybody knows. But to…

Omen (03:49)
Yeah, my wife designed the logo as well. yeah, family, full family affair.

Mike Hunsberger (03:54)
Nice.

Omen (03:58)
That’s right.

Amy (04:02)
To jump in, like Mike said, we want to dive into TSP investment options. And listeners might be thinking, we’ve been over this a million times. But it cannot hurt to go over it again. There are changes that happen. We had a change last year. And then just how people think about putting portfolios together. And the value of having a third financial planner in here is that we get a third perspective on how to do it. ⁓

With that, Omin, how about if you just give us an overview of the funds that are available in TSP?

Omen (04:37)
Sure. Yeah, so ⁓ core funds, right, is C, S, I, F, and G. That’s the way, yeah, your five core funds. ⁓ And those core funds, I think in my opinion, make things rather easy, which is why people enjoy the TSP so much, ⁓ is because when we tell you to diversify your funds, you can do diversification with those five core funds. It’s super easy to do. ⁓

In addition, you’ve got your L funds, your life cycle funds, basically every five years, pardon me, every five years, one closes and one opens up. I think this past year, right, we had a brand new life cycle fund open up and we had one that retired. ⁓ And so for me, the way that I look at this,

for the most part, generalized, is I kind of separate these two things out as you’ve got your five core funds, but you’ve got your life cycle funds. And the reason I separate those two out is because the life cycle funds are made up of the core funds. And so ⁓ I’m sure we’ll talk through this a little bit later about which ones are better or worse or how would you combine these? But that’s, for the most part, that’s it. mean, TSP keeps things rather simple.

Mike Hunsberger (06:01)
Yeah, you hear people complain about that. But again, you can create a diversified portfolio, which is what most financial advisors preach is, don’t put all your eggs in one basket. And you can get a good portfolio based on that. Can you get every little thing and every tweak? No. But for the core of your portfolio,

Yeah, I find TSP to be, you know, fully adequate. ⁓ yeah, so let’s dive into the, you know, the five individual funds and just kind of talk through so people can understand what, you know, when I get the C fund, what am I getting? So why don’t we start with C?

Omen (06:50)
Yeah, so Z-Fund is the equivalent of your large cap S &P 500. ⁓ We have, and I think we have to say this, that this is not specific investment advice. We’re not telling you to go do this thing, but right, so SPY is a common ticker symbol for ⁓ an equivalent of what you might get if you were to do the same thing in the civilian spaces in a.

a Fidelity or Vanguard or Schwab account or something like that, right? Is you get that large cap weighted investment.

Mike Hunsberger (07:28)
Yeah, exactly. again, 500 largest companies, US companies. And it’s been on a tear the last, I don’t know, five, 10 years. So performed really well. But again, it’s those 500 companies based on their overall size.

Omen (07:35)
That’s right.

Mike Hunsberger (07:55)
heavily weighted to really like the top 10, top 15 names in there. So pretty concentrated, especially right now. And then, Do want,

Amy (08:05)
I mean, I

No, I was just going to say, I mean, I think a lot of people think of C-Fund as sort of the bread and butter, right? Even if you’re building your portfolio on the outside, you probably have something that is S &P 500 or S &P 500-esque, or you have the components of it just in a different wrapper called a different thing with a different expense ratio.

Omen (08:12)
Yes.

Amy (08:29)
So if we call that the bread and butter, then I think the next fund to maybe talk about is the S fund ⁓ because it brings in a little bit different piece of the US market. Can you talk about the S fund a little bit?

Omen (08:43)
Yeah, so SFUN, your small cap equivalent, ⁓ it presents a little bit more risk for a potential reward. ⁓ So the equivalent ticker proxy on the outside, and I’d be curious your thoughts on this one too, but you have ⁓ USMIX. Have you heard of that one?

Amy (09:07)
That’s not the one I use, but I use IWM, which is the Russell 2000. Yeah. Yeah. ⁓

Mike Hunsberger (09:08)
I have heard that, but…

Omen (09:08)
Yeah, there’s a, which one do you use, Amy?

IWM. OK. Gotcha. Yeah.

Mike Hunsberger (09:18)
Yeah, there’s

Omen (09:19)
Yes.

Mike Hunsberger (09:19)
no exact proxy, but yeah, there’s several that folks use and they’re all probably good enough type thing to what’s on the outside.

Amy (09:29)
Yeah, yeah.

Omen (09:30)
Yeah, and I

think when we talk about the proxies, at least the way that I think about it is the behavior. We’re trying to track the behavior of this particular investment on what it might do on the outside. And so for a small cap, ⁓ for me, I would expect this to be a bit more ⁓ risky, I should say, a little bit more standard deviation ⁓ movement. ⁓ But the potential for reward in that is also

likely to be a little bit larger. Yeah, I don’t know if there’s anything else on that that you want to.

Amy (10:08)
Yeah, mean, how do you, yeah, and how do you think about, know, I mean, I guess we’ll get into this in a little bit more detail after after we cover everything, but, ⁓ you know, adds risk potential reward. ⁓ So it might be, you know, something that perhaps younger people are using in their portfolios, right?

Mike Hunsberger (10:09)
Yeah, it’s just the smaller.

Omen (10:29)
Yeah, you know, when we talk through putting together the entire asset allocation, right, of your CSI, F and G funds, right, the, you talked about the bread and butter of the C fund being kind of the, that’s going to sit nice and big at the base of your allocation. But, you know, for somebody who’s not going to retire for the next 20, 30, 40, even 50 years, I mean, you think about an 18, 19, 20 year old coming in.

We’re not talking about military retirement. We’re talking about work optional retirement when you don’t have to work anymore. And now this is when you’re starting to take that money. You’ve got a lot of time. mean, just think about what has happened in the last 30, 40, 50 years for the three of us, right? We’ve had COVID, we’ve had the housing market, we’ve had the tech.com bubble, we’ve had 1987. We’ve had a few things and…

So that is, we’ve seen several times where the market has had some significant negative impacts where if you would have held a significant portion of the S fund during those times, you would have probably seen a significant downside in your portfolio. However, we’ve also seen the market recover from that quite nicely. And so ⁓ you’ve got time. So when you’re talking about the specific allocation of S fund, it really depends on how much gray hair you have probably.

Not me or Mike included in this. I’m not taking this like we’re definitely still young enough to have S fund. ⁓ it really kind of depends on your timeframe about how much S fund you have.

Mike Hunsberger (12:18)
All right, and then the iFund.

Omen (12:21)
Aye, aye, aye for international, right? ⁓ Not in the Navy sense here. So this one is, and you guys pointed out some things to me that ⁓ were news to me in terms of the addition of merging, but this is the international market fund we have seen in the last year. The international market has done quite well. ⁓

I think for the most part, most advisors that I know have always encouraged, and I use always loosely, but always encouraged some amount of international, right? The US, despite what we might think, ⁓ is only two thirds of the market. And so if you are isolating yourself and your investments to just what the US is doing, you are missing out potentially on some global diversification of what other markets are doing. And so, you know,

We noted a couple of different things in the notes that we were prior to us starting our recording here about emerging markets. I think the, I’d be curious your thoughts on the addition of emerging markets, but for me, I consider that to be more diversification. It’s something that I actually use in my own client investment portfolios is not a lot, but some.

diversification into emerging markets. So I’m glad to see that in the iFund, but no shock. I don’t think for those in the military that ex China, I don’t know. and Amy, I kind of know your backgrounds in the military, ⁓ in many of the spaces that I worked in as well. China is definitely a factor in several different areas of our lives.

Perhaps we might not want to be investing in Chinese investments. So not really a shock there, I don’t think.

Amy (14:23)
Yeah, yeah, I mean, and of course, there’s actual laws on the books at this point on, you know, ⁓ what we can invest in in terms of China. So it shouldn’t surprise anyone that, yes, they added emerging markets, which I think is a very favorable thing. ⁓ Emerging markets are, you know, think of those as the small cap of the entire world, ex-US. ⁓ so finally, TSP updated to an index that tracks

Omen (14:40)
Yes.

Amy (14:52)
all developed markets ⁓ ex-China, ex-Hong Kong ⁓ but it also includes emerging markets. I think that’s a really big win ⁓ for TSP participants.

⁓ no, no. One other thing I’ll add is, you know, it’s, it’s interesting. ⁓ so for years and years, so I, I’ve been in the industry since 2019. ⁓ and since 2019, even when I was at a, at a different, ⁓ firm, ⁓ a lot of clients underway international and having the discussion with them to try and get them to add international was difficult. Why would I do that?

Mike Hunsberger (15:09)
Alright.

Omen (15:29)
Mm-hmm.

Amy (15:37)
⁓ Well, last year is a good reason for why you do that. You don’t know when you’re going to get yours like that. Does it mean that’s going to continue? Nope. But it also doesn’t mean that, you know, if the US has a correction, for example, it doesn’t mean that international will have a correction as well. And that’s the value of diversification that you were just talking about with S-Fund.

⁓ Now let’s jump over to F-Fund because I think that’s kind of, you know, a fairly standard run of the mill, easy to figure, you know, easy to find something on the outside that acts like that. Tell us about F-Fund and how your clients and people you talk to feel about F-Fund.

Omen (16:19)
Yeah, so at Fund, we’re moving into fixed income, right? So the equivalent on the outside world is probably something along the lines of the ticker AGG, right? And so when it comes to the Fund and even the G Fund for that matter, fixed income is certainly a portion of most of my clients’

portfolios, but to the certain extent of most of the people that we’re talking to in the military who are actively contributing to their TSP or even in the federal government for that matter, if they have access to the TSP, the amount of fixed income that they have in their portfolio is likely not to be significant, right? I mean, we’re talking 10, 20, maybe 30 % or so. So, you know, when it comes to the F fund,

It’s certainly better than the G fund. And I have heard some stories back in the day when ⁓ the default was the G fund. Like when you made your contributions, the default was to the G fund and people didn’t know that. And they get to the end of their 20 year career and they had hundreds of thousands of dollars in the G fund. ⁓ That’s unbelievable to me. But that aside.

Mike Hunsberger (17:40)
I just had

somebody come in last week that they, yes, luckily they were investing outside also. So their overall allocation was not horribly, horribly, horribly skewed, it was, the TSP was 100 % G after and getting ready to hit.

Amy (17:46)
Mm-hmm. Mm-hmm.

Omen (18:05)
And I.

Mike Hunsberger (18:08)
30 years and retire.

Omen (18:11)
that is painful. And we’re always thankful for the G fund and even the F fund in certain cases in years like 2022. But they are very specific years and they’re ⁓ sparse. They’re dispersed out over the time. So there’s not a lot of ⁓ growth opportunities there. Again, I think that there’s some portion of most people’s allocation that, ⁓ depending on how much time they have left till they need the funds, would be

well suited for the F fund. But for the most part, when we’re talking about young military folks, ⁓ perhaps, perhaps not.

Amy (18:50)
Yeah, I mean, I go ahead, Mike.

Mike Hunsberger (18:50)
And overall, just

a standard kind of bond fund, bond index across all types of bonds. intermediate, if you’re familiar with bonds, it’s typically an intermediate time frame when these bonds will mature. typically the 7 to 10 year range for folks who maybe are a little more technical on the bond side.

Omen (18:56)
Mm-hmm. Yep.

Mike Hunsberger (19:19)
⁓ means they’ve holding short-term stuff, they’re holding long-term stuff, and it just kind of averages out to that intermediate time frame for bonds and what you can expect.

Amy (19:32)
And one thing, you know, so what I find with folks is, ⁓ you know, there are people who are more conservative, especially as they’re getting closer to their retirement. ⁓ And I work with a lot of federal employees as well as military. on the federal employee side, there tends to be some conservative folks there. ⁓ They have a preference towards G-Fund, shockingly. ⁓ But ⁓ because in their view, because in the near term, if you look in the recent past, G-Fund has outperformed F-Fund.

that’s because in 2022 there was such a big, you know, basically a bond implosion, if you will, to a degree. Now, you know, here’s the thing, right, so the argument against a fund and even G fund is that it’s boring.

Well, the older you get, the more you will appreciate boring. ⁓ So I like to tell people there should always be one part of your portfolio you really hate. And if it’s bonds, that’s fine. But there might be a time when you appreciate those bonds. Yeah. Yep. Times changed.

Omen (20:33)
I used to like mowing my lawn too. I’m starting not to, right? So the times

do change. And Mike, know, one thing you said that brought up a thought on the F fund, right? If people in the outside world are a little bit concerned or they really don’t want to think about, do I, you I need to buy this short-term bond or this intermediate term bond or this long-term bond and now I’m

trying to figure out this bond ladder and when do things, you know, mature and then I got to figure out how to reinvest it and all these other things. The easiest thing to do at that point is just get into a bond fund, right? And so the F-fund actually kind of makes that easy when you think about it.

Mike Hunsberger (21:20)
Yeah, 100%.

Amy (21:23)
So let’s talk now about the G fund. So the G fund is a little unique. I mean, can you just kind of talk about what makes it unique?

Omen (21:32)
Yeah, there isn’t an equivalent for this in the civilian spaces. Like there’s no proxy that you can track. And the uniqueness of the G Fund comes in its tie to the average of the US Treasury rate, which we consider as the risk-free rate. So this fund itself is considered a stable value fund. And so for somebody getting closer to the retirement who wants something a little bit more stable,

The G fund is it. Like this is quite literally the fund that we want to start putting people into as they get older.

Mike Hunsberger (22:11)
Yeah, I mean, it’s it’s again, the challenges when folks, you know, think that they will need to be in that when they’re in their 20s and 30s. But ⁓ yeah, it’s great. You know, again, similar to cash, similar to a money market. I mean, that’s the equivalent. You can start thinking about this as, you know, your bank paying interest, you know, high yield savings account.

Omen (22:22)
Yeah, yeah.

Mike Hunsberger (22:39)
You know, that’s that’s the range of returns you’re going to get maybe a little bit better type thing. But it’s it’s really that bedrock of investments that, hey, I’m retiring next year and I know I’m going to need, you know, $50,000 in spending. I don’t want that in the C or the S fund because, hey, you know, we don’t know if it’s going to be down 25 percent. And I’ll put this money that I know I’m going to spend in the next.

Omen (23:00)
That’s right.

Mike Hunsberger (23:09)
one, two years in the G fund. So I know it’s going to be there. And then when I need to take those distributions, I’m just pulling that money ⁓ out of that fund. yeah. So yeah, appreciate you giving us a rundown on all the different funds, the individual core components. ⁓ As we talked about a little earlier, there’s also the Lifecycle Fund. So

Why don’t we dive into those and just ⁓ talk through what those are and then how you go about potentially using them if you decide that that’s what’s right for you. And you gave us a little bit of an overview, but you want to go a little bit deeper on the L funds again.

Omen (23:58)
Yeah, so I guess first and foremost, I’m a man of simplicity, just because if things are too complex, they’ll just go over my head and I’ll forget about it and all these other things. So I consider the L Funds to be the easy button. It has all five core funds within it.

And if you don’t know anything else, the military itself is going to help you out. I we’ve had some recent changes in the way that the government now invests you into the most appropriate L-fund to you when you enter the service. That’s fantastic. And if that’s all you ever do, you can’t go wrong. This is going to be an amazing journey for you. ⁓

So if you don’t have a lot of investing knowledge or you really just don’t want to be in charge, I guess, of how you’re allocated out, the L Funds just do it for you, right? You’ve got all five core funds in there and the farther out you are, what are we on right now? think L2070 is 2075. 2070. Oh my gosh, 2075. Oh, how young are the people getting in the service right now? Anyway.

Amy (25:02)
2075.

Mike Hunsberger (25:02)
2075 was the new one

that just launched.

Amy (25:07)
you

Omen (25:14)
So 2075, all the allocations that we just kind of alluded to when we talk about CS and I versus F and G funds, those are all taken to an account for how much risk you can take on as an individual who is 20 years old versus somebody who is 45 years old. And with the L fund, the work to allocate into heavy equity, so heavy CS and I funds,

early on to low fixed income F and G early on, there’s a slope. As you move from 20 years old to 45 years old, if you stay in that same fund, it’s just going to, the trajectory will slope downward to less equities when you’re 45 and more fixed income when you’re 45. Between the three of us, we can

We could talk all day on whether or not that slope is appropriate for somebody getting out of the military. But if you don’t know anything about investing and it’s just not something you want to think about, the L-Fund is for you because it adjusts that risk automatically.

Mike Hunsberger (26:28)
Yeah, and just some numbers, pulled these up just before we got on. So like I said, the L2075 means, hey, I think that’s about when I’m going to retire. Right now, that’s starting out with 1 % in the fixed income GNF funds and 99 % in the CS &I. So very heavily weighted toward the equity side, like Oman talked about and how that

Amy (26:28)
enough.

Mike Hunsberger (26:58)
that makes sense. You’ve got such a long time horizon. That’s where you want your money. Then you look at 2045. So 20 years from now, you’re getting ready to retire. That’s shifted now. over the 30 years to about 23 % GNF funds and 77 % CS &I. So the stock side. Finally, as you get even closer, 2030.

You have 43 % in the GNF funds and 57 % in the CS &I funds. And then finally, there’s a unique one. Eventually, you pass, like Oman said, 2025 just went away last year because, we hit 2025. You transition into the income side, which the L income right now for those in retirement.

would be 72 % on the GNF fund and 28 % on the CS &I fund. you go from 1 % fixed income in 2075 to, yeah, and then in the L income fund when you’re fully retired, you go all the way up to 72%. So, you know, the nice thing is as Oman hit,

This is all done behind the scenes for you, professionally managed. They’re keeping the weightings correct, you know, based on their models and you don’t have to worry about it.

Omen (28:35)
Yeah. And I think one of the cool things about the L Fund too is if you, let’s say you, you know, in other service today, you’re in the L 2075 Fund and 10, 15 years from now, you think, you know what? I think I’m not happy with where…

it’s weighted at the moment. I’d rather mostly be still in equities and I don’t like the slope that there is. By the time we get there, we’re now in, there’s a L2085 fund available. You can shift all your investment into that L2085 and continue to take more risk. And I think that that’s where the nuance is that the three of us might talk about of, you know, when somebody gets to the end of their military career, they actually still have probably

quite a bit of time left before they, know, time horizon, I should say, before they would need that money. And so perhaps being so heavily weighted into fixed income might not be ideal, ⁓ but you can always just move into a different L fund and get a different slope trajectory that is weighted more heavily into equities a little bit longer than your retirement from the military.

Amy (29:49)
And I think that’s a good place to kind of start asking about philosophy, right? So ⁓ like as you pointed out, this is not ⁓ individual advice for anyone. not saying what to do. ⁓ But I mean, when you have, let’s say a client comes to you, ⁓ they have four life cycle funds of differing years ⁓ and two or three of the individual funds. And you go through the financial planning process

with

them, you understand their goals, you know when they need money, you know how old they are, let’s say these folks are in their mid-50s. How do you think about, you know, of adjusting that portfolio for them? What’s your philosophy? And there’s three planners here, so you get three philosophies, but Omin Hubbard, if you tell us about yours.

Omen (30:39)
So first I’ll tell you that I’ve actually never seen and my firm is ⁓ less than a year old. So I’m sure it’s on the horizon somewhere, but I’ve never seen anybody with multiple L funds. What I usually see is an L fund and some portion dedicated to CS and I somewhere, maybe F and G, but like it’s a combination of L fund and the core funds. That’s what I usually see. So the very first thing that I’m

thinking when I see something like that is what is this person’s understanding of how all of this works together? Are they aware that this is really a risk-based analysis? And so that begins the conversation upfront. We’re going to go through what their investment risk profile looks like based on their tolerance, their capacity, and their need.

But ultimately, I would prefer to begin with a little bit of education on that. And it’s really understanding what they understand about why they are in those funds that they chose. And if there’s no real good reason, because I think most Americans think this way of, well, if one is good, more is better. Like, I’m just going to shotgun blast this thing into every investment I possibly can.

understanding that the L funds is actually made up of those four, five core funds. That is the nuance where I think most clients don’t necessarily understand that when you say I’m going to be, I want to just be 100 % equities. So I’m going to be in the CS and I, but this L fund looks great. So I’m going to take this L fund as well. Like, well, just you have now just added

fixed income, did you know that? And so just kind of talking through those things first. And then once I get an understanding of what their tolerance capacity and need is, and we’ve gone through a little bit of education to understand how comfortable they would be in moving from one fund to maybe a multiple of the others, or if they’re just, I don’t want to think about it. Let’s move you all into the L fund. Once we get that conversation out of the way,

then we make those recommendations about what’s most appropriate for them.

Amy (33:12)
Gotcha.

Mike Hunsberger (33:13)
Yeah, it’s

interesting when you’re talking about, what are they trying to do? mean, if somebody comes in and goes, yeah, there’s too much international, so I added some S to, know, because I wanted more small cap exposure. All right, great. They go, well, somebody just told me that I should have some of this. Or, you know, I looked and this has done well the last couple of years, so I just pushed in and kept the L.

Yeah, it’s definitely having that conversation and trying to understand and then, you know, it’s also, you know, one of the big things is looking across their whole portfolio if they’ve got stuff outside of TSP and trying to create a logical and, you know, well diversified, well balanced whole portfolio, you know, it can be difficult.

to do and really keep the clients on that path.

Omen (34:19)
Yeah. Amy, are you going to say something?

Amy (34:20)
⁓ And rest assured,

I mean, yeah, rest assured you will see more than one L fund at some point. I’ve seen, I’ve seen five in one, in one TSP. I think that might be the record, but yeah, I’ve definitely seen five with some other individual. And, you know, like you said, it’s, it’s good to have a conversation about why.

Mike Hunsberger (34:26)
yeah.

Omen (34:28)
Wow.

Yeah. Wow.

Amy (34:40)
Right. There is a reason that they did it maybe because they didn’t understand. that’s education, but maybe there’s a deliberate reason why they did it. And a lot of times ⁓ it’s because they wanted to take more risk, but they like the idea of the diversification as they take it. So they add the funds that are further out, ⁓ which, you know, that that’s great. ⁓ But it makes it a little bit more difficult to manage the overall portfolio to Mike’s point.

Omen (34:40)
Yes.

Amy (35:09)
⁓ Now, how do you think about the life cycle funds in terms of glide path and, you know, kind of setting clients up for the future? Do you really like using the life cycle funds? Do you use them situationally or do you prefer to break them apart and just buy the underlying core funds?

Mike Hunsberger (35:11)
And I.

Omen (35:29)
If they are clients of mine, my preference is to break them out of the L Fund and manage that because, Mike, you mentioned it as well. And I’ll go, I’ll keep banging the drum on the fact that I’m a simple man is that when you have it in the L Fund now, and we’d be doing annual checks anyway, but now with that glide slope, you…

your TSP fund is doing something throughout the year in terms of it starting to glide into more fixed income and less equities than what you potentially have planned, right? You kind of have to look ahead and say, okay, this fund is here at the beginning of the year and at the end of the year, it’s meant to be there. So how do I account for that glide slope in the rest of the client’s portfolio?

through taxable accounts, through retirement accounts, and make sure that overall they are taking a risk that is appropriate for them. But when you break it out of the L-fund, then although you are still doing a rebalance, it’s still a little bit more predictable, I should say, about where a client might be in terms of how much equity they have and how much fixed income they have in their total portfolio.

Mike Hunsberger (36:54)
And so, you know, kind of along the same lines that was on, you know, more on the client side. And yeah, that makes perfect sense when they’re working with somebody. Let’s let’s do it for a listener who goes, hey, I do this on my own. Not, you know, I don’t have an advisor. I do want to keep this relatively easy. You know, we’ve turned around the glide path and increasing risk, decreasing risk. But let’s can you talk some about.

Omen (36:59)
Yeah.

Yeah.

Mike Hunsberger (37:22)
Let’s use a notional person and why they may want to L2040 versus 2045 versus 2075 overall. Can you hit that?

Omen (37:41)
Sure. So we don’t want a Dave Ramsey this, right? Is that what you’re saying? OK, we’re not going to do that. I like Dave Ramsey, but there are some nuances. OK, so I would say very first thing when we talk about whether or not you’re going to be in the 2045 versus the 2040, we’re talking optimization. The thing that

Mike Hunsberger (37:49)
Yeah.

Omen (38:07)
If you choose one or the other, the very fact that you are investing into an L fund that’s going to do some work for you in the future is goodness. Like keep doing that. The nuances in a 2045 versus a 2040 versus a 2075, that really comes down to your understanding of your own risk. How often are you checking the TSP? How often are you watching the news?

⁓ all of these, ⁓ and how, how long is it till you need the money? ⁓ do you need the money? I mean, that’s often a question with pensions. Like, do you even need the money? I don’t know. So, you know, it’s for me and if I were to just talk to somebody, anybody out on the street about, ⁓ how to think about their, which fund to take advantage of, especially if you’re just talking to life cycle funds.

It’s really what’s your understanding of how much risk you are willing to take. The farther out with the lifecycle funds, the more risk you are taking. But you have the more potential for reward. mean, they are linked. And just because you choose a 2040 fund or even a 2040

20-30 fund doesn’t mean you’re not taking risk. It’s just the other way around where if everything’s in fixed income or a good portion of it is in fixed income, now I’m asking, well, are you keeping up with inflation? like there’s risk involved on either side of things. But generally speaking for anybody who’s listening and thinking, I do want kind of the easy button with the L fund. ⁓ I think this just comes down to how much risk you’re willing to.

Take how much time do you have before you actually need the money? Do you actually need the money things like that?

Mike Hunsberger (40:09)
Yeah, I think that’s key. When are you going to retire? When are you looking to start drawing from this? And that’s kind of the date you want to potentially center on. So if you’ve got 20 years till ultimate retirement, 2045 is probably a good starting point. And then go, oh, you know,

need to take a little more risk or something because maybe you started late saving or something, but then maybe bump it up to the 2050 and you’ll get a little bit more, again, on the stock CS &I funds and a little less in the GNF. ⁓ But yeah, those are some great points is it’s when you need the money and also

you know, if you’re willing to take a little more risk type thing or really the two decisions you want to make and then set it and forget it and really just keep plowing money in and you know, you’re probably not going to go wrong with that.

Omen (41:18)
Yeah.

Amy (41:19)
And

I do think it’s key for some people to realize, you know, the answer to the question of when do I need this money? The answer really might be never. ⁓ If you’re going to have a pension, you know, you don’t know that for sure. ⁓ But it certainly isn’t going to be the day you take off the uniform. ⁓ You know, in most cases, in some cases, of course it is, but ⁓

Omen (41:28)
Yes.

Amy (41:40)
you maybe you should be saving in other accounts if it’s the day you take off your uniform. ⁓ But that’s a whole other discussion. ⁓ So Omin, as we wrap up, what else do want people to know about the, ⁓ you know, kind of crafting a portfolio using the core or L funds in TSP?

Omen (41:44)
Yeah.

Probably really just not to overthink it. The mere fact that you are investing in TSP at all. ⁓ So especially for our BRS, which is pretty much everybody hopefully that we’re talking to at this point. I think we’re getting there almost. ⁓ And that is, you know, get the match, but don’t overthink this. If you’re not comfortable with investing, think about the L funds. If you’re more

comfortable with investing, think about the core funds, the individual core funds, and how you might invest there. And Mike, you brought up earlier somebody who is maybe invested in not only an L fund, but also some element of a core fund to deliberately change the percentages of having more small cap or international or less or something like that. If you want to change that up, great.

just know that you’re adding a little bit more complexity. You’ll have to watch that a little bit more in terms of, you know, as your L-fund starts to change its percentages, you’re gonna have to change your core fund percentages and things like that. ultimately, TSP is set up to be a very easy thing to do. You know, there are some downsides to it being so easy, but for the most part, for the average investor, yeah, don’t overthink this.

Mike Hunsberger (43:28)
Great advice. ⁓ So Omen, if folks wanted to find out more about you or Formynder, where can they go?

Omen (43:38)
Yeah. LinkedIn. So I am ⁓ one of two Omen qual vlogs, if you can believe it. So I told my brother, don’t name my, his son, my nephew Omen. I said, don’t do it. It’s like a boy named Sue, right? ⁓ He did it anyway. So like, great. So, but he is a, he’s a teenager. So you can set us apart by the gray hair. I am on LinkedIn and you can find me there, Facebook.

as well as my website formander.com that’s ⁓ the number four myndr.com and yeah those are probably the three main places to reach out.

Amy (44:18)
Well, it’s always, always, always a pleasure to talk with you, Omen. Thanks for joining us today.

Omen (44:24)
Appreciate you having me on the show.

Mike Hunsberger (44:27)
Take care, everybody.