July 5, 2020
As noted early last year (“Ready to Rebalance Your L Fund?”), TSP administrators rebalanced the “Lifecycle” L Funds. And as part of that rebalancing, they also expanded the choices of L Funds from five to ten.
As readers know, The L Funds are designed to transition gradually from higher-growth stock fund holdings to more stable bond fund holdings over the lifetime of the investor. (See this post for the different holdings in the original L Funds.) The five original funds all completed this transition at the end of their respective decades, so that the L 2020 Fund just completed its transition to the bond-heavy L Income Fund. Although, as the previous post on rebalancing the L Funds noted, the L Income is experiencing a bit of a bump in its equities holdings, which is probably a good thing.
But this somewhat limited selection made it difficult to plan for mid-decade start of planned withdrawals, assuming an investor wanted the transition to have completed by that point. Also, new participants can expect to save and invest for four decades or longer now, so the L 2050 fund - the one with the longest investing horizon among the L funds - was no longer sufficient for the probable investing goals of newer participants.
Now, participants can invest in L Funds that complete their respective transitions mid-decade, too, and extend all the way to 2065. The expanded selection of L Funds includes the “L 2025” and “L 2035” funds, that end mid-decade, all the way up to the “L 2065” fund.
(For some additional approaches and strategies for investing in the TSP, in addition to or separate from L Fund investing, check out TSP Investing Strategies, 2nd Edition, available on Amazon or at your local BX/PX/library…)
This site will need to adjust some of the dashboards over time to account for the new L Funds, such as the “Current Prices” page. But it is a positive development and one that will serve newer participants well.